Turn on Construction Industry Scheme CIS invoicing

Steps

  1. Navigate to "Settings > Organisation > Toggle Features > Accounting" and tick the "Construction Industry Scheme" box

Guide Information

  • Difficulty: Beginner
  • Estimated Completion Time: 2 minutes

From the HMRC website the Constuction Industry Scheme (CIS) sets out the rules for how payments to subcontractors for construction work must be handled by contractors in the construction industry.

Contractor pays subcontractor

When a contractor pays a subcontractor, the contractor withholds 20% of any subcontractor labour costs (Net). The contractor is required to pay this withheld balance over to HMRC on a monthly basis.

The subcontractor can reclaim the 20% withheld by the contractor. The subcontractor reclaims the amount from HMRC at the end of the tax year. In practice, the reclaimed amount is knocked off any tax owed by the subcontractor to HMRC.

The scheme is effectively a way for HMRC to use contractors to tax subcontractors up front.

Step 1.

To enable the CIS feature navigate to “Settings > Organisation > Toggle Features”, click on the “Accounting” tab and turn it on.

 

 

Construction Industry Scheme invoices

Once the  Construction Industry Scheme is toggled on you will notice that new CIS specific codes have been generated in the chart of accounts “Settings > Codes”. As you create new invoices use the appropriate CIS account.

 

Clear Books supports pdf invoices for the Construction Industry Scheme. On our CIS invoices we show Net, VAT, CIS amount, and total Due after CIS.

The system builds up the balance owed to HMRC if you are a Contractor and the balance due from HMRC if you are a Subcontractor.

An example CIS bill: