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Set up a new contact as a subcontractor for CIS

Created on  | Last modified on 

Summary

How to set up a new contact as a subcontractor for CIS in Sage Accounting.

Description

Before deducting CIS and VAT reverse charge from subcontractor invoices, ensure you've set up CIS for your business.

You'll then need to set up the subcontractors supplier record. Read add CIS to an existing supplier, if you already have a non-CIS contact set up. 

▼CIS information required to set up a subcontractor
  • The registered CIS name
  • The CIS deduction rate of either; Gross 0.00%, Standard 20.00% or Higher 30.00%
  • For 0.00% deduction rates, you need their Unique Taxpayer Reference (UTR)
  • For 30.00% deduction rates, you need their National Insurance Number (NINO)
  • The organisation type

You're prompted to enter references depending on the organisation type. These fields aren't mandatory but we recommend filling them in if you can. See the table below-

Organisation type Relevant references
Sole Trader National Insurance number
Partnership National Insurance number and Company Registration number
Limited Company Company Registration number
Trust National insurance number and Company Registration number

NOTE:

You can only create CIS subcontractor records with a UK address and a currency of pound sterling (GBP).  

 

Resolution

Set up a Supplier contact as a subcontractor

  1. From Contacts, select Suppliers, then New Supplier.
  2. Fill in the relevant information for the subcontractor, for more information read how to create a supplier.
  3. On the CIS tab tick-Registered contractor in the CIS scheme and fill in the required information.
    ▼ See a breakdown of the required information
    • 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
    • Verify Details at HMRC- Select this link to verify the subcontractor using HMRCs free online CIS service

    NOTE:

    If verifying the subcontractors details returns an 'unmatched' error, read HMRC's CIS Reform Manual for further information.

    • Unique Taxpayer Reference  - The UTR for the subcontractor. Only mandatory for 0.00% and 20.00% deduction rates
    • Verification No. - The Subcontractor's HMRC CIS Verification Number. Only mandatory for the 30.00% deduction rate
    • Organisation Type - Select from: Sole Trader, Partnership, Limited Company or Trust
    • National Insurance No. - The Subcontractor's National Insurance Number. It's nine 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 eight numbers, or two letters followed by six numbers. Optional but recommended for quicker CIS 300 Return processing; include if known
  4. Before selecting Save select the Account Details tab.
  5. Set the Account Default to CIS Labour Expense.
  6. If applicable, enter the subcontractors VAT Number and tick VAT Reverse Charge. 
  7. Review the information and then select Save.

NOTE:

You can't disable a contact for CIS once it's set up. You can still process non-CIS invoices by using different ledger codes.

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