Dynamics 365 Finance
Category
Mar 28, 2024
Published date
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Article Type
AI Summary
- The Construction Industry Scheme (CIS) is a tax framework in the United Kingdom that requires contractors who hire subcontractors for construction work to deduct money from their payments to subcontractors.
- The deducted amount is passed on to the UK tax authority, HM Revenue and Customs (HMRC), as advance payments toward the subcontractor’s tax and National Insurance contributions.
- Organizations that pay subcontractors and have spent over £3 million on construction work in the past 12 months must register with HMRC as a Contractor in the CIS.
- The rules also apply to businesses based outside the UK if they engage in construction work in the UK.
- Subcontractors do not have to register with the scheme, but the deductions applied are higher if they do not.
- Construction work in the UK includes activities such as preparing sites, architecture, demolition, building work, repairs, and non-construction tasks.
- To configure CIS in Dynamics 365 Finance and Operations (F&O), organizations need to set up the applicable legal entity, accounts office reference number, withholding tax authorities, ledger posting groups, withholding tax settlement periods, withholding tax codes, and withholding tax groups.
- Organizations also need to correctly set up master data for subcontractors, products, and procurement categories to ensure accurate calculation and reporting of withholding tax.
- To run a CIS-dependent transaction, organizations need to create a purchase order with a CIS subcontractor and CIS item(s), verify the withholding tax groups, and process supplier payments.
- The article also provides instructions for generating the subcontractor statement and the withholding tax payment report in F&O.
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