Sales transactions

In our example, we're charging our contractor £200 for a day's labour. Our CIS deduction rate is 30%.

If your supply is subject to reverse charge VAT, this affects the amounts posted to your Trade Debtors and VAT categories.

Sales invoice

• The amount of CIS labour that will be deducted is recorded against a CIS Withheld category, rather than recording the full gross value against the Trade Debtors category. This way, you can easily see how much is going to be withheld and make sure your balance sheet accurately reflects the amount you're owed
• The net value is recorded against a CIS Labour category so you can easily report separately on the total amount you've charged for labour
• If your invoice also included materials, this is recorded against the CIS Materials category

In our example

The Profit and Loss report shows the total value of CIS labour.

The balance sheet shows the total amount you can expect to be deducted when your contractors pay.

Customer Receipt

• When the contractor pays the invoice, the CIS amount is withheld. In our example, we've only received £180
• To show that this CIS has been withheld, the CIS amount is moved to the CIS Realised category

In our example

The receipt is now reflected on the balance sheet.

Credit Notes

• If you need to credit off the invoice, the reverse posting is made. Although credit notes are not reflected on your CIS reports, they will update the categories
• Where an invoice has reverse charge VAT applied, the credit note must also include reverse charge VAT. This is to make sure your VAT return and categories are updated correctly

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Set up your own CIS ledger accounts