Record your CIS role

Go to Settings, then CIS.

This is where you record whether the business works under the Construction Industry Scheme. Nothing else in CIS works until it is set.

The screen is available to every kind of business. It is deliberately not part of Self Assessment settings, because a limited company can be a contractor or a subcontractor too.

Your role

Pick one:

• Contractor - you pay subcontractors.
• Subcontractor - contractors deduct tax at source from payments to you.
• Both - a business in the middle of the chain, which is common.
• Not in CIS.

What choosing subcontractor gives you

• Every invoice gets a this is a CIS job switch, and each line a Labour or Materials choice.
• A sent CIS invoice gets a panel for recording the deductions from your contractor's payment and deduction statements.
• A recorded deduction settles that part of the invoice and posts to the ledger, so what you are still owed stays right.

What choosing contractor gives you

• A monthly CIS300 return, built from what you actually paid subcontractors, with the whole-pound truncation HMRC requires.
• The statutory payment and deduction statement for each subcontractor, as a PDF or by email.
• Recording a return as filed moves what you withheld onto the PAYE and CIS you owe HMRC.

Your registration status

A subcontractor also records its CIS registration status, because that is what sets the rate contractors take:

• Gross payment status - 0%.
• Registered for CIS - 20%.
• Not registered, or not yet verified - 30%.

Kontala does not guess. Without a status recorded, deductions cannot be worked out at all - guessing 20% for a business with gross payment status would invent a deduction, and guessing 0% for a registered one would lose it a tax credit.

Why your business type matters

For a subcontractor, the legal form decides where a deduction ends up, and the two treatments are opposites:

• A company's deductions are money HMRC owes it. They build up as a receivable and are set against the PAYE and CIS the company owes each month.
• An unincorporated business's deductions relieve the owner's own Income Tax and Class 4 National Insurance. They are recorded as drawings, and totalled on box 81 of their Self Assessment return.

If no business type is recorded, Kontala refuses to record a deduction rather than pick one. Set it on Company details first.

Related

• CIS deductions taken from you
• Your monthly CIS300 return
• Company details