Construction businesses have extra settings to get right
If you work in construction, your accounting software has to handle more than most. Contractors must record deductions taken from subcontractors. Subcontractors must record deductions taken from them, so they can be claimed back or offset. And where the VAT domestic reverse charge applies, invoices must show no VAT charged, with the customer accounting for it instead. Most cloud packages can handle all of this, but only once the right features are switched on and set up correctly.
This page is about software settings. For the rules themselves, see our domestic reverse charge VAT page, and for contractor returns see CIS monthly returns.
Common CIS and reverse charge software problems
- CIS features not enabled, so deductions are recorded as ordinary costs or simply missed.
- Subcontractors set up without the right deduction status, or with labour and materials not separated.
- Subcontractor invoices showing gross receipts as income without recording the deduction suffered.
- Standard VAT charged on invoices where the reverse charge applies, or reverse charge applied where it shouldn't be.
- VAT returns not picking up reverse charge purchases correctly.
- CIS suffered by a limited company not reconciled to amounts offset against PAYE.
How we set up and correct CIS in your software
- You invite us using your software's accountant or advisor invitation. We don't need your password.
- We confirm whether you act as contractor, subcontractor or both, and your VAT position.
- We enable and configure CIS settings, deduction rates, and labour and materials items.
- We set up reverse charge VAT codes and invoice wording for the jobs where it applies.
- We review past transactions, correct deductions and VAT treatment, and reconcile CIS balances.
HMRC's guidance on when the domestic reverse charge applies is useful background. If a CIS feature in your package doesn't behave as described, that's a matter for the provider's support team, and we'll keep the records right in the meantime.
What we'll need from you
Your role in CIS, your UTR and VAT details, a list of subcontractors or contractors you work with, recent invoices and payment and deduction statements, and copies of VAT returns submitted. If you've had more deducted than you owe, see our CIS tax refunds service.
Supporting Kent's construction trades
We work with builders, electricians, plumbers and other trades across Kent, getting their software set up so CIS and VAT work from day one. Send us a message to tell us which package you use.
Frequently asked questions
Does my accounting software need to be set up for CIS?
If you are a contractor or subcontractor in the scheme, yes. Without CIS settings, deductions are usually missed or recorded as ordinary costs, which makes reconciliation with HMRC difficult. Most cloud packages include CIS features that need enabling and configuring for your role.
Why is my software charging VAT on reverse charge jobs?
Usually because the customer or item has a standard VAT code set as default, rather than a reverse charge code. Invoices under the domestic reverse charge should show the VAT the customer must account for, but not charge it. We set the right codes and wording and correct invoices already issued.
How should CIS deductions suffered be recorded by a subcontractor?
The full gross amount should be recorded as income, with the deduction recorded separately as tax paid on account. Recording only the net payment understates turnover and loses track of the tax suffered. Correct recording makes claiming or offsetting the deductions much simpler.
Can you correct CIS records for past months?
Yes. We review invoices, payments and deduction statements, record any missing or incorrect deductions, and reconcile the totals to what has been reported. If returns already submitted to HMRC were wrong, we explain how they can be corrected.
CIS Software Setup and Corrections across Kent
We help clients throughout the county, including: