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How to record the CIS CITB Levy in Sage 50 Accounts

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Summary

The Construction Industry Training Board (CITB) promotes vocational training in the construction industry, and imposes a levy on contractors to fund its operations. In Sage 50 Accounts & CIS the CITB nominal code is used to record payments of CITB levy. A percentage of the levy can be reclaimed by the contractor from the subcontractor. This article describes how to post CITB levy transactions to correctly affect your accounts when using the CIS module.

Description

NOTE: The CITB levy is calculated on the net value of the labour elements of subcontractor invoices. CITB Levy doesn't appear on subcontractor monthly statements.

For further information about the CITB levy, please refer to the CITB website.

Resolution

 

 

 

The following steps contain everything you need to help you record the CIS CITB Levy in Sage 50 Accounts. However, if you're using Sage Accounts 2014 (v20) or below, please refer to the Steps - 2014 & below tab. You can check your software version in Help > About > Program Details > Version Number.

TIP: To improve the way you use Sage Accounts, the toolbar options vary with the size of the software window you're using. You can also customise the toolbars to your individual preferences. The instructions in the help topics are based on the default toolbars. For more information - Read more >

EXAMPLE: The main contractor is invoiced by the subcontractor, Mr Bloggs, for £100 relating to labour plus £20.00 VAT. The CITB levy applied is 1.5%. Mr Bloggs' tax treatment for CIS is Standard Net at 20%.

 

To post a purchase invoice representing the invoice from the subcontractor

So that the CIS Tax calculates correctly you must post two separate invoices, one for the net value and one for the VAT value.

  1. Subcontractors > Batch invoice.
  2. Complete the Batch Subcontractor Invoices window as follows:
    A/C* Date* N/C* Details Net T/C* VAT
    Bloggs Date 6000 Labour 100.00 Original subcontractor invoice tax code 0.00
    Bloggs Date 6000 Labour 0.00 Original subcontractor invoice tax code 20.00
    *This information is mandatory.

  3. To post the invoice > Save.
  4. To close the Batch Subcontractor Invoice window > Close.

You've successfully posted the purchase invoice from your subcontractor.

 

To post a purchase credit to deduct the value of the levy from the outstanding invoice
  1. Subcontractors > Batch credit.
  2. Complete the Batch Subcontractor Credits window as follows:
    A/C* Date* N/C* Details Net T/C* VAT
    Bloggs Date 6000 CITB Levy 1.50 Original subcontractor invoice tax code 0.00
    *This information is mandatory.

    Note: The CITB levy isn't subject to VAT. If a T1 tax code is used to match the original subcontractor invoice then the VAT value must be 0.00.
  3. To post the credit > Save.
  4. To close the Batch Subcontractor Credit window > Close.

You've successfully posted the CITB levy credit to reduce the outstanding value of the subcontractor invoice.

 

To allocate the purchase credit to the subcontractor's purchase invoice

You must allocate the purchase credit to the invoice for the net value.

  1. Bank accounts > Payments drop-down > Supplier payment.
  2. Payee drop-down list > choose the relevant subcontractor.
  3. Select Allocate CIS Taxable credits > OK.
  4. Complete the Supplier Payment window as follows:
    Date* Enter the date required for the allocation. The current program date is entered automatically, but can be amended if required.
    Cheque No. Leave this box blank as no further transaction will be posted.
    Amount Leave the Amount or cheque value box blank.
    *This information is mandatory.

    The full amount of the credit is to be allocated to the original subcontractor invoice for the net value.

  5. On the relevant credit line > click the Payment box > Pay in Full.
  6. On the relevant invoice line > click the Payment box > enter the full value of the credit.

    In this example, £1.50.

  7. To save the allocation > Save.
  8. To close the Supplier Payment window > Close.

You've now allocated the credit to the invoice.

 

To post a purchase payment to pay the outstanding invoices

You must post the payment to both the invoice for the net value and the invoice for the VAT value.

  1. Bank accounts > Payments drop-down > Supplier payment.
  2. Payee drop-down list > choose the relevant subcontractor.
  3. Complete the Supplier Payment window as follows:
    Date* Enter the date required for the allocation. The current program date is entered automatically, but can be amended if required.
    Cheque No. Enter a reference or cheque number if appropriate.
    Amount Leave the Amount or cheque value box blank.
    *This information is mandatory.

  4. On each subcontractor invoice line > click the Payment box > Pay in Full.
  5. To post the purchase payment and CIS Tax Deduction purchase credit >Save.
  6. To close the Supplier Payment window > Close.

You've now successfully posted a payment to your subcontractor and a purchase credit to deduct CIS tax from the invoice. You must now journal the CITB levy value from the Labour (Direct Expense) nominal code to the CITB levy (Overhead) nominal code. For further information about doing this, please refer to the following section.

 

To post a journal to move the outstanding levy to the CITB nominal code
  1. Nominal codes > Journal entry.
  2. Complete the Journal Entry window as follows:
    N/C* Name Details T/C* Debit Credit
    6000 Labour CIS CITB Adjust Original subcontractor invoice tax code 1.50  
    8200 CITB Levy CIS CITB Adjust T9   1.50
    *This information is mandatory.

  3. To post the journal > Save.
  4. To close the Journal Entry window > Close.

You've now moved the outstanding CITB levy value to the CITB levy code. The levy remains outstanding until the total levy for the period is paid to the CITB.

 

To post a bank payment to show the year end payment to the CITB
  1. Bank accounts > Payments drop-down > Bank payments.
  2. Complete the Bank Payment window as follows:
    Bank* Date* N/C* Details Net T/C* Tax
    Enter the Bank Account that the payment is paid from Date 8200 CITB Levy Amount due T9 0.00
    *This information is mandatory.

  3. To post the bank payment > Save.
  4. To close the Bank Payments window > close.

You've now successfully posted your payment to the CITB.

The following steps contain everything you need to help you record the CIS CITB Levy in Sage 50 Accounts in Sage Accounts 2014 (v20) and below. If you're using a later version of Sage Accounts, please refer to the Steps tab. You can check your software version in Help > About > Program Details > Version Number.

EXAMPLE: The main contractor is invoiced by the subcontractor, Mr Bloggs, for £100 relating to labour plus £20.00 VAT. The CITB levy applied is 1.5%. Mr Bloggs' tax treatment for CIS is Standard Net at 20%.

 

To post a purchase invoice representing the invoice from the subcontractor

So that the CIS Tax calculates correctly you must post two separate invoices, one for the net value and one for the VAT value.

  1. Suppliers > Links pane > Subcontractors List.
  2. Batch Invoice > complete the Batch Subcontractor Invoices window as follows:
    A/C Date N/C Details Net Tax Code VAT
    Bloggs Date 6000 Labour 100.00 Original subcontractor invoice tax code 0.00
    Bloggs Date 6000 Labour 0.00 Original subcontractor invoice tax code 20.00
  3. To post the invoice > Save.
  4. To close the Batch Subcontractor Invoices window > Close.

You've successfully posted the purchase invoice from your subcontractor.

 

To post a purchase credit to deduct the value of the levy from the outstanding invoice
  1. Suppliers > Links pane > Subcontractors List.
  2. Batch Credit > complete the Batch Subcontractor Credits window as follows:
    A/C Date N/C Details Net Tax Code VAT
    Bloggs Date 6000 CITB Levy 1.50 Original subcontractor invoice tax code 0.00

    NOTE: The CITB levy isn't subject to VAT. If a T1 tax code is used to match the original subcontractor invoice then the VAT value must be 0.00.

  3. To post the credit > Save.
  4. To close the Batch Subcontractor Credits window > Close.

You've successfully posted the CITB levy credit to reduce the outstanding value of the subcontractor invoice.

 

To allocate the purchase credit to the subcontractor's purchase invoice

You must allocate the purchase credit to the invoice for the net value.

  1. Bank > Supplier Payment.

    Sage Accounts 2012 (v18) and below - Bank > Supplier.

  2. Payee drop-down list > choose the relevant subcontractor.
  3. Select Allocate CIS Taxable credits > OK.
  4. Complete the Supplier Payment window as follows:
    Date Enter the date required for the allocation. The current program date is entered automatically, but can be amended if required.
    Ref or Cheque No Leave this box blank as no further transaction will be posted.
    Amount or cheque value box Leave the Amount or cheque value box blank.
    The full amount of the credit is to be allocated to the original subcontractor invoice for the net value.

  5. Click the Payment box on the relevant credit line > Pay in Full.
  6. Click the Payment box on the relevant invoice line for the net value > enter the full value of the credit.

    In this example £1.50.

  7. To save the allocation > Save.
  8. To close the Supplier Payment window > Close.

You've now allocated the credit to the invoice.

 

To post a purchase payment to pay the outstanding invoices

You must post the payment to both the invoice for the net value and the invoice for the VAT value.

  1. Bank > Supplier Payment.

    Sage Accounts 2012 (v18) and below - Bank > Supplier.

  2. Payee drop-down list > choose the relevant subcontractor.
  3. Complete the Supplier Payment window as follows:
    Date Enter the date required for the allocation. The current program date is entered automatically, but can be amended if required.
    Ref or Cheque No Enter a reference or cheque number if appropriate.
    Amount or cheque value box Leave the Amount or cheque value box blank.
  4. Click the Payment box on each subcontractor invoice line > Pay in Full.
  5. To post the purchase payment and CIS Tax Deduction purchase credit > Save.
  6. To close the Supplier Payment window > Close.

You've now successfully posted a payment to your subcontractor and a purchase credit to deduct CIS tax from the invoice. You must now journal the CITB levy value from the Labour (Direct Expense) nominal code to the CITB levy (Overhead) nominal code. For further information about doing this, please refer to the following section.

 

To post a journal to move the outstanding levy to the CITB nominal code
  1. Company > Links pane > Nominal Ledger > Journal Entry.

    Sage Accounts 2012 (v18) and below - Company > Links pane > Nominal Ledger > Journals.

  2. Complete the Journal Entry window as follows:
    N/C Name Details T/C Debit Credit
    6000 Labour CIS CITB Adjust Original subcontractor invoice tax code 1.50  
    8200 CITB Levy CIS CITB Adjust T9   1.50
  3. To post the journal > Save.
  4. To close the Journal Entry window > Close.

You've now moved the outstanding CITB levy value to the CITB levy code. The levy remains outstanding until the total levy for the period is paid to the CITB.

 

To post a bank payment to show the year end payment to the CITB
  1. Bank > Bank Payments.

    Sage Accounts 2012 (v18) and below - Bank > Payment.

  2. Complete the Bank Payment window as follows:
    Bank Date N/C Details Net T/C Tax
    Enter the Bank Account that the payment is paid from Date 8200 CITB Levy Amount due T9 0.00
  3. To post the bank payment > Save.
  4. To close the Bank Payment window > close.

You've now successfully posted your payment to the CITB.

 

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