Construction industry Scheme (CIS) and Business ByDesign
In the United Kingdom, principle contractors in the Construction Industry can manage their subcontractors and the payments via the Construction Industry Scheme. Details on the scheme can be read here. Business ByDesign supports the financial part of the CIS process for Contractors.
Confirm Business Configuration:
From the Business Configuration Work Center Edit project scope and navigate to Section 4 – Questions. From here select Cash Flow Management > Tax Management > Tax Filing
Set up Tax Arrangements:
The company/contractor needs to have the Withholding Tax Arrangements set up.
When you add a subcontractor to your Supplier Base in ByDesign, there are two sections you *must* complete to ensure CIS Compliance.
- Ensure the Subcontractor is valid by obtaining the verification from HMRC. and enter the returned verification number on the tax details tab of the supplier record
- Enter the CIS tax arrangements in the lower box of the Tax Details for the Vendor:What is really important here is that you *DO NOT* add data to the Drop Down List “Withholding Tax Income Type” leave it BLANK
Now when you enter a supplier invoice for this supplier/SubContractor, the invoice will automatically calculate the Withholding Tax for Services Only. Materials are not subject to WHT under CIS and so no WHT is calculated.
Once the invoice is posted and ready for payment, ByDesign will automatically calculate the payment amount. In Line with HMRC Rules
With the WHT posted automatically
From the Tax Management Work Center, a Withholding Tax Return Run should be created for Tax Arrangement “UK_WITHHOLDING”. This will then provide the data that needs to be reported to HMRC.
SAP has recently supplied another Tax Return Arrangement, “GB_WITHHOLDING_NEW” which you should run no later the 14 days after payment to your supplier/sub contractor. This is known as the Vendor Statement – and details payments and deductions.
I hope this helps everyone understand how ByDesign can support businesses using CIS within their organisation.
Good morning John
A question on the resultant WHT file, can this file be transmitted via the MTD functionality or does it need to be transmitted manually? Looking on the HMRC website, ByD is not among the list of approved interface systems but wondered if this would load via the MTD link.
This file will need to be transmitted manually, we currently do not offer it via the MTD link,
Thanks for confirming John.