If you have subcontractors doing construction work for you – you may need to account for CIS and withhold 20% of the payment for the HMRC. This can easily be done in your agreement, but you need to donate a little of your precious time up front.
Firstly you’ll need to create a new balance sheet account – in your chart of accounts – designated for the 20% CIS. When this is done you’ll have to create and book the supplier invoice for the due amount.
Next you’ll have to book the payment for the subcontractor, where you withhold the 20% CIS amount. This is done by creating a supplier payment leave the contra account field blank – and then just distribute the amount between the bank account (the amount to be paid minus 20%) and the CIS account which you have created recently (for the 20% CIS).
When you have booked the supplier payment – remember you still have to pay the withheld CIS.
When this is due, by the end of the month, all you have to do is create a journal entry and book the payment for the CIS and the payment will now be reflected in your CIS account.
In our e-copedia you can read more about how you can account for CIS
- How to create a new account
- How to book your supplier invoice
- How to book a supplier payment
- Withholding CIS
- Recording CIS payment
Have an edifying weekend.