To enable CIS deductions from invoices, designate new or existing contacts as subcontractors.

• Verify the status of a subcontractor with a link to the HMRC website
• Establish a default CIS ledger account on a contact to ensure automatic CIS deduction and prevent errors
• Opt to enable the application of reverse charge VAT to relevant transactions created for a contact

 CAUTION: You can't disable a contact once set up for CIS. If the contact is no longer a contractor or subcontractor, you can still send invoices without CIS deductions by using standard ledger accounts.

 CAUTION: You can't disable a contact once set up for CIS. If the contact is no longer a contractor or subcontractor, you can still send invoices without CIS deductions by using standard ledger accounts.

1. From Contacts, select Suppliers, then New Supplier. 

   For an existing contact, select the pencil icon next to the contact.

2. For new contacts, add the contact details as required. For more information, see Create a customer contact.
3. From the CIS tab:

• Registered CIS Name - Name subcontractor registered with HMRC; for sole traders, first and surname; for partnerships, partnership name
• Deduction Rate - Need's to match the rate verified by HMRC. It's used to apply CIS deductions on purchase transactions. If the rate changes, update it before entering new purchase transactions to ensure correct tax treatment
• Unique Taxpayer Reference  - The UTR for the subcontractor. For partnerships enter the partner UTR
  Optional but recommended for quicker CIS 300 Return processing; include if known.
• Verification No. - The Subcontractor's HMRC CIS Verification Number
  

   

  Optional but recommended for quicker CIS 300 Return processing; include if known.
• Organisation Type - Select from: Sole Trader, Partnership, Limited Company or Trust
• National Insurance No. - The Subcontractor's National Insurance Number. It's 9 characters and made up of letters and numbers in the following format: QQ 12 34 56 A
  

   

  Optional but recommended for quicker CIS 300 Return processing; include if known.
• Company Registration No. - For Partnerships and Limited Companies enter the Company Registration Number. It's 8 numbers, or 2 letters followed by 6 numbers
  

   

  Optional but recommended for quicker CIS 300 Return processing; include if known.

From the Account Details or Options tab:

1. • Set the Account Default to a CIS Labour Expense ledger account

     For existing contacts, this is on the Options tab. This ensures accurate CIS deductions on invoices, as the ledger account is automatically set upon invoice entry.

   • If you prefer not to set a default, manually select a CIS ledger account when creating the invoice. CIS ledger accounts are only visible to CIS-registered contacts
     

   • VAT Reverse Charge - For VAT-registered contacts for appropriate invoices. Read more about reverse charge and CIS
2. Save the contact.

Verify a subcontractor with HMRC

Before paying a subcontractor, you must verify their CIS registration with HMRC and confirm their deduction rate. This ensures deducting the correct values when creating an invoice.

Reverify subcontractors absent from CIS returns in the current or past 2 tax years.

1. From Contacts, select Suppliers.

2. Select the subcontractor.
3. From the CIS tab, then pencil icon.

4. Choose "Verify Details with HMRC." This action directs you to Gov.uk where you can confirm the subcontractor's registration and deduction rate. A prompt to sign in to Government Gateway will appear. Ensure you have the following information readily available:

   • Your Unique Taxpayer Reference (UTR)
   • The reference number for your HMRC accounts office
   • Your HMRC employer reference
   • Your subcontractor’s:
     • UTR
     • For sole traders, provide National Insurance numbers for verification, excluding temporary numbers beginning with 'TN' or 2 digits
     • Company name, company UTR and registration number if they’re a limited company
     • Nominated partner details, trading name and partnership UTR if they’re a partnership

Record a CIS invoice from subcontractor

Set up your own CIS ledger accounts

Create a customer contact