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


When a contractor pays a subcontractor, the contractor may be required to withhold a percentage of the subcontractor's labour charge. The contractor is then required to make a return of the subcontractors paid, and to pay sums withheld, to HMRC on a monthly basis.


The subcontractor can then get a credit for the sums withheld against their annual tax bill or against sums they are required to pay to HMRC for their own subcontractor payments or PAYE.

Contractors


The steps below explain the flow for contractors, from creating subcontractor bills to submitting a CIS return to HMRC via Clear Books. Each step links to the specific process guidance.


1. Enable the CIS feature on the Settings > Configure system > Toggle features menu.


2. Add new subcontractors (or edit existing suppliers).


3. Create a new bill with one of the appropriate CIS account code.


4. Make sure all subcontractors are verified on the Tax > CIS > Verifications menu.


5. You can compile a CIS return on the Tax > CIS menu.


6. Once the CIS return is created you can submit this directly to HMRC, by entering your CIS credentials on the Settings > Organisation > Details & Tax menu.


7. You can make payment to HMRC by explaining a payment from an imported statement or bill using the CIS creditor account.

Subcontractors


The steps below explain the flow for subcontractors (or contractors who also subcontract), from creating sales invoices to submitting CIS suffered. Each step links to the specific process guidance.


1. Enable the CIS feature on the Settings > Configure system > Toggle features menu.


2. Use the appropriate CIS Account Code when creating new sales invoices.


3. Compile a CIS suffered report showing CIS deductions on your sales invoices.


4. If you have an Open Payroll subscription, you will be able to submit an EPS showing YTD CIS deductions from payments.


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