CIS contractors in AccBooks AI

What is the Construction Industry Scheme?

The Construction Industry Scheme (CIS) regulates payments from contractors to subcontractors in the UK construction industry. Contractors must verify subcontractors with HMRC and deduct tax from payments at either 20% or 30% (or 0% for gross payment status holders), paying the deductions to HMRC monthly.

Setting up CIS in AccBooks

Go to Settings → CIS and toggle on You are a contractor. Enter:

• Your HMRC CIS contractor reference number (UTRN).
• Your PAYE employer reference (the same one used for payroll).

Adding subcontractors

Before you can pay a subcontractor, you must verify them with HMRC:

1. Go to CIS → Subcontractors → Add subcontractor.
2. Enter the subcontractor’s:
   • Legal name (or company name if a limited company)
   • National Insurance number (individuals) or Unique Taxpayer Reference (companies)
   • Business type: individual, sole trader, partnership, or limited company
3. Click Verify with HMRC. AccBooks queries HMRC’s CIS verification service in real time.
4. HMRC responds with the subcontractor’s CIS payment status:
   • Gross (0% deduction) — they have gross payment status from HMRC.
   • Net (20% deduction) — verified but standard rate applies.
   • Higher (30% deduction) — not verified or doesn’t match HMRC records.

Making CIS payments

When you pay a subcontractor for construction work:

1. Go to CIS → Payments → Record payment.
2. Select the subcontractor.
3. Enter the payment date and gross amount.
4. Separate the labour element from the materials element — CIS deductions only apply to the labour portion.
5. AccBooks calculates the CIS deduction: Labour × 20% (or 30% or 0%).
6. Enter the net payment to the subcontractor (gross minus deduction).
7. AccBooks creates a CIS deduction statement for the subcontractor.

Monthly CIS return

By the 19th of every month, you must submit a CIS return to HMRC showing all payments to subcontractors in the previous month, along with deductions made.

In AccBooks:

1. Go to CIS → Monthly return.
2. Review the payments for the month.
3. Click Submit to HMRC.
4. AccBooks submits the return via HMRC’s online CIS service.

You must also pay the CIS deductions to HMRC by the 22nd (electronic payment). AccBooks shows the amount due on the CIS dashboard.

CIS deduction statements

Subcontractors need a statement showing CIS deductions made so they can offset them against their own tax bill. In AccBooks:

• Monthly statements are generated automatically after each payment is recorded.
• Go to CIS → Subcontractors → [name] → Statements to download or email them.

Gross payment status

Subcontractors can apply to HMRC for gross payment status (0% deduction) if they meet turnover and compliance criteria. If a subcontractor tells you they’ve obtained gross status:

1. Go to CIS → Subcontractors → [name].
2. Click Re-verify with HMRC to confirm the status has changed.
3. AccBooks updates the deduction rate to 0% automatically.

Never accept a subcontractor’s word that they have gross status — always verify directly with HMRC.

Being a CIS subcontractor

If you’re also registered as a CIS subcontractor (receiving payments from contractors with CIS deductions made), you can track CIS deductions received:

Go to Settings → CIS → You are a subcontractor and toggle it on. Record CIS deductions received under CIS → Deductions received. These offset against your corporation tax or income tax liability at year-end.