Before you start to create a purchase documents for a subcontractor that is registered for retention tax you need to be sure that the setup is correct for:
- vendors
- items
- resources
- fixed assets
- g/l accounts.
You find more information here.
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Process
1 - Purchase invoice and Payment
Before you start to create a purchase documents for a subcontractor that is registered for retention tax you need to be sure that the setup is correct on :
- vendors (../setup/#set-up-vendors)
- items
- resources
- fixed assets
- g/l accounts.
You find more information here.
Purchase document
- Choose the 🔎 icon, enter Purchase Order/Purchase Invoice, and then choose the related link.
- Fill in the fields as necessary. Hover over a field to read a short description. If the vendor is registered for retention tax all lines, except the type of Comment and Charge (Item), automatically gets the CIS/RCT Business Posting Group populated on the line.
- If the CIS/RCT Product Posting Group is not set on the resource, item or g/l account, you need to add this information on the line.
When posting the purchase invoice the system creates a CIS/RCT Entry and Detailed CIS/RCT Entry when you post the purchase invoice. The deducted tax amount is recorded in the Expected Amount field.
Pay a purchase invoice
When you create a payment an additional Detailed CIS/RCT Entry will be created. This entry will have the Type Application. On the CIS/RCT Entry, the Expected Amount will be reduced and the Actual Amount will be increased with a ratio of the payment.
When the document applied, the CIS/RCT Entry and the last Detailed CIS/RCT Entry will have Expected Amount zero and Actual Amount with entire deduction.
Monthly return
This section outlines the essential requirements for monthly payment reporting within the Construction Industry Scheme (CIS), as specified by Her Majesty’s Revenue and Customs (HMRC). According to HMRC guidelines, all scheme participants are obligated to submit a comprehensive monthly return that details payments made within the scheme or, alternatively, report if no payments have occurred during the specified period.
Close CIS/RCT periods
To make a submission to the authorities, you must close CIS/RCT Tax Period. You cannot reopen a period, clear the checkboxes, nor post into close period.
- Choose the 🔍 icon, enter CIS/RCT Periods, and then choose the related link.
- Choose the Close Retention Tax Periods action. The connected Detailed CIS/RCT Entries will be closed
Note
Please be aware that the system allows the closure of only consecutive periods. Ensure that you adhere to this requirement when managing and finalizing reporting periods.Submit CIS/RCT Period
If you set Submit Method to HMRC in the retention tax setup page, it is possible to submit the data directly to the HM Revenue & Custom’s online service. For the successful monthly submission, it’s essential to configure and input precise HMRC data obtained during the schema registration to ensure accurate setup to pass the quality standard and business validation. Please read about it here.
To create submission request
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- Choose the Submit Retention Tax Period action. On the action run, you will be asked to agree with declarations that are needed for successful submission.
Note
To create monthly return, the period has to be closed previously. More about it you can find here.Upon successful submission, the retained amount from the GL account designated for retention tax is automatically reallocated to the settlements account, as configured in the posting setup.
Report Inactivity
In instances where no deductions have been made during a specific reporting period, it is still essential to submit a report indicating this inactivity. This ensures accurate and compliant reporting under the Construction Industry Scheme (CIS)**. To report inactivity, follow these steps:
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- Choose the Submit Retention Tax Period action. On the action run, you will be asked to agree with declarations, and then check the option Report Inactivity to True in the request page.
Statements
When a period is closed, the CIS Subcontractor Statements are created for that period. While a CIS/RCT Period contains information about the payments deduction for some period of time, a CIS Subcontractor Statement shows information for a period of time and particular subcontractor/vendor.
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- Choose the Drill-down button in the Statements field. If there were any payment for the closed period, you will be able to see detailed information on deductions, providing a comprehensive overview of the CIS Subcontractor Statement for the specified period and vendor.
In addition to accessing the CIS Subcontractor Statements from the CIS/RCT Period page, you can also use the CIS Subcontractor Statements report for the specific period to manage subcontractor statements. This report will display the statements for all subcontractors associated with the selected period.
When you run the report, you have the option to download the statements for all subcontractors as a ZIP file containing the PDFs. Alternatively, if you check the Send Emails option in the request page, each subcontractor will receive their respective statement via email.
To send statements to the subcontractors
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- In the Reports action group you can find CIS/RCT Statements report.
- Check the option Send Emails in the request page.
- Press OK.
Note
For emails to be sent, the subcontractor’s email addresses must be defined in their Vendor Card page. If any subcontractor is missing an email address, the report will not execute, and no emails will be sent. Ensure all required email addresses are properly set before initiating the process.2 - Monthly Return
This section outlines the essential requirements for monthly payment reporting within the Construction Industry Scheme (CIS), as specified by Her Majesty’s Revenue and Customs (HMRC). According to HMRC guidelines, all scheme participants are obligated to submit a comprehensive monthly return that details payments made within the scheme or, alternatively, report if no payments have occurred during the specified period.
Close CIS/RCT periods
To make a submission to the authorities, you must close CIS/RCT Tax Period. You cannot reopen a period, clear the checkboxes, nor post into close period.
- Choose the 🔍 icon, enter CIS/RCT Periods, and then choose the related link.
- Choose the Close Retention Tax Periods action. The connected Detailed CIS/RCT Entries will be closed
Note
Please be aware that the system allows the closure of only consecutive periods. Ensure that you adhere to this requirement when managing and finalizing reporting periods.Submit CIS/RCT Period
If you set Submit Method to HMRC in the retention tax setup page, it is possible to submit the data directly to the HM Revenue & Custom’s online service. For the successful monthly submission, it’s essential to configure and input precise HMRC data obtained during the schema registration to ensure accurate setup to pass the quality standard and business validation. Please read about it here.
To create submission request
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- Choose the Submit Retention Tax Period action. On the action run, you will be asked to agree with declarations that are needed for successful submission.
Note
To create monthly return, the period has to be closed previously. More about it you can find here.Upon successful submission, the retained amount from the GL account designated for retention tax is automatically reallocated to the settlements account, as configured in the posting setup.
Report Inactivity
In instances where no deductions have been made during a specific reporting period, it is still essential to submit a report indicating this inactivity. This ensures accurate and compliant reporting under the Construction Industry Scheme (CIS)**. To report inactivity, follow these steps:
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- Choose the Submit Retention Tax Period action. On the action run, you will be asked to agree with declarations, and then check the option Report Inactivity to True in the request page.
3 - Subcontractor Statements
When a period is closed, the CIS Subcontractor Statements are created for that period. While a CIS/RCT Period contains information about the payments deduction for some period of time, a CIS Subcontractor Statement shows information for a period of time and particular subcontractor/vendor.
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- Choose the Drill-down button in the Statements field. If there were any payment for the closed period, you will be able to see detailed information on deductions, providing a comprehensive overview of the CIS Subcontractor Statement for the specified period and vendor.
In addition to accessing the CIS Subcontractor Statements from the CIS/RCT Period page, you can also use the CIS Subcontractor Statements report for the specific period to manage subcontractor statements. This report will display the statements for all subcontractors associated with the selected period.
When you run the report, you have the option to download the statements for all subcontractors as a ZIP file containing the PDFs. Alternatively, if you check the Send Emails option in the request page, each subcontractor will receive their respective statement via email.
To send statements to the subcontractors
- Choose the 🔍 icon, enter CIS/RCT Period, and then choose the related link.
- In the Reports action group you can find CIS/RCT Statements report.
- Check the option Send Emails in the request page.
- Press OK.