CIS Subcontractor
When using the CIS module, an additional option will be available on the Supplier record window.
This option, found just below the Supplier Name field, is a tick box labelled CIS.
Ticking this box indicates that this supplier is subject to the rules of the Construction Industry Scheme.
Payments made to this supplier will be in accordance with their tax status and may have tax withheld.
The Subcontractor icon will become active when a supplier record is flagged as CIS, this will open the CIS - Subcontractor window where you will record the tax status of the subcontractor and other details.
Tip: You will need to select Edit to tick the CIS option but not to access the Subcontractor window. The window has it's own Edit option.
CIS - Subcontractor window
Code/ Name - The Supplier code and name are displayed from the Supplier Record being viewed.
Do not use in transactions - This record can be flagged to stop it from appearing in the list of suppliers available for transactions. You will also be able to exclude it from some reports using the simple search.
Tax Status - Clicking the button will display a list from which you can select the appropriate tax status.
The list includes Unmatched, Gross, Standard and Higher.
You must only select a tax status when notified of the correct status by HMRC.
HMRC will give you the tax status when you contact them to 'verify’ the subcontractor. You can do this by telephone, via the internet or electronically using the HMRC Communications feature in Access Accounts software. If you verify using the communications feature, the tax status can be updated automatically.
Subcontractors registered under the pre 06-April-07 rules can be transferred over to the new system without having to be re-registered or having their tax status verified. You should already have received details of the subcontractors who do not have to be verified under the new CIS procedures, by the HMRC on forms CIS333 issued in November 2006 and March 2007.
Business Type - Clicking the button will display a list from which you can select the appropriate business type.
The list includes Sole Trader, Partnership, Trust and Company.
The business type defines what other information should be entered and, in case of a Partnership, how the tax status will be applied.
You will not be able to select Partnership if the Supplier account has already been used for transactions before being flagged as CIS. You will be prompted to create a new Supplier record for the partnership.
When contracting with a partnership, it is the Tax Status of the partner who negotiated the contract that will be used when making payments. We suggest that you set up a supplier record for the Partnership and individual supplier records for the partners involved. These records can then be linked (see Partnership Link below) and when the Partnership record is selected on a transaction the partners will be offered for selection (see Entering Transactions).
CITB Levy - Tick this box if it has been agreed in writing that the CITB Levy can be deducted from payments made to this subcontractor.
Under the Industrial Training Act 1982, Employers must pay a Levy to CITB on payments made to labour-only subcontractors.
However, you are not permitted to make deductions from amounts paid to labour-only subcontractors unless:
you have been given permission in writing prior to making the deduction or,
the deduction is authorised under your contract with the subcontractor.
The Levy rate is set in System Control, see CIS Subcontractors - System Options.
You cannot select this option for Subcontractor records that have a Business Type of Partnership. However, payments made to a Partnership will be subject to the Levy if the Partner selected on the transaction has this option selected.
UTR - A UTR (or Unique Taxpayer Reference) is the unique reference issued by HMRC.
It has ten digits and can be found on Tax Returns and Tax Notices.
Your subcontractor should be able to provide you with their UTR, if not you should get in as much other information as you can and contact HMRC.
The number you enter will be subjected to a validation check by the software and you will be unable to save the record with a number that does not pass this check.
Contract Agreed - Tick this box to confirm that a contract has been agreed.
Agreeing a contract is part of the declaration you will have to complete for verification of subcontractor engagement.
Only subcontractors who have entered into a contract can be verified, this box must be ticked if verification process is run from within the software.
NINumber - Enter the National Insurance Number for the subcontractor if known. If entered, this must be in the correct format, e.g. AA111111A
Company Reg. No. - Enter the Company Registration Number for the subcontractor if known.
CIS300 Name - Enter the CIS300 Name for the subcontractor if known.
This is the name that should be entered on the CIS300 monthly return.
It should be either the registered name or trading name as used by HMRC on their database.
Verification Number - Subcontractors who have not been matched during the verification process are given a tax status of Higher and a special verification number which must be quoted on their Statement of Net Payments. This number can be entered manually or may be updated automatically by the verification process.
Suppliers who are subcontractors under the CIS scheme and have not been matched during the verification process are given a tax status of Higher and a special verification number which must be quoted on their Statement of Payments. The verification number is very important and subcontractors will be required to quote this number when they request credit for deductions made at the higher rate.
A Statement of Payment and Deduction section will be included as part of the remittance advice. If deductions have been made at the higher rate, the verification number will be included as part of this statement.
There is only space for one verification number in the Statement of Payment and Deduction, if you are paying multiple invoices to a Partnership where one or more of the partners is on higher rate tax, only the first verification number will be shown. This is in accordance with HMRC instructions.
The information from the Statement of Payment and Deduction is repeated on the Statement of Payments report.
Date Matched - This date is added to the record when the subcontractor is matched during the verification process. The date can be entered manually or updated automatically if the verification process is run from the HMRC Communications feature. This date is important because subcontractors who are paid gross must have their tax status checked annually. This field records the date that matching last occurred.
Partnership Link - This field is available for Business Types of Sole Trader, Trust and Company. It provides a link to another CIS registered supplier record. The adjacent lookup button opens the Partnership List window.
The linkage is required because:
Under the CIS rules, the matching process for subcontractors who are part of a partnership agreement is based on the Partnership UTR.
When contracting with a partnership, it is the Tax Status of the partner who negotiated the contract that will be used when making payments.
If the Partnership record is selected on a transaction, the associated partner records will be offered for selection (see Entering Transactions).
The link also enables payments to multiple records within a partnership agreement, which will be combined by UTR for the CIS300 monthly return.
To create the link:
Enter the Supplier code of the partnership record or click on the search button to display a list from which you can select.
The subcontractor list will only contain records that have the Business Type of Partnership.
Title/ Surname/ Forenames - Additional fields available when the Business Type of Sole Trader is selected.
Enter the individual details of the subcontractor's name.
This detail is required for returns to HMRC and the XML Schema for the verification process. It is not held elsewhere because the supplier name field on the record window is free format.
Insurance Company/ Policy Number/ Expiry Date - You can enter details of the Public Liability Insurance held by the subcontractor.
When details are entered, the Insurance Checked checkbox will be activated so that you can record if this has been done.
When entering transactions, if a policy number and expiry date have has been entered here and the expiry date is prior to the transaction date, you will be alerted to this fact by a warning message.