Subcontractors may fall under the government’s CIS legislation which means that a percentage of the labour charge must be retained, 20% (if verified) or 30% (if un-verified) when they are invoiced by these subcontractors.
The CIS module for Sage 50 automatically deducts the correct values from the Purchase Invoices when payments are made. Sage 50 CIS identifies the purchase invoice as a CIS invoice when it is analysed to the CIS Labour Nominal Code as defined in the CIS parameters in Company Preferences. Often this is 6500.
- A setting ‘Use CIS Features’ to turn on the functionality. System ¦ Settings ¦ Ledger Use CIS
- NOTE – You need to contact Protean Support to check or enable this setting.
- A Nominal Link, ‘CIS Labour’ and ‘CIS Materials’ in System ¦ Accounts ¦ Nominal Links.
- 2 Separate Miscellaneous Types in Miscellaneous Nominal Codes for Labour and Materials.
- A CIS tab on the Supplier Record in Protean to store the necessary information.
This information is mostly imported from Sage and can be refreshed from Sage, using a suppliers import, as new subcontractors are added.
When a Miscellaneous Purchase Order is raised against a subcontractor you must split it into two lines – ‘Subcontractor Labour’ & ‘Subcontractor Materials’ using separate Misc Types. The ‘Subcontractor Labour’ Misc Type will be flagged as a ‘Labour’ line using the existing Labour flag on the Miscellaneous Type screen.
When a Purchase Invoice is received against a Supplier flagged as a subcontractor the Purchase Invoice Matching screen in Protean will display this flag in a new field on the Purchase Invoice Header. If the invoice is not to be treated as a CIS invoice then this flag can be removed on the Purchase Invoice Matching screen.
When matching you can then split the invoice (if required) by Labour & Materials (as only the Labour line has money retained).
If the Purchase Invoice is analysed against a Job directly the system will take any value against a Misc line flagged as ‘Labour’ and post it to CIS Labour.
When the Purchase Invoice is posted across to Sage an extra journal is added to the output so that the labour value is posted to the CIS Labour account (as specified) and then it journaled out to Accruals as normal so that the GRN can still be matched off.
This will result in the invoice (or the labour element of it) being picked up by the CIS module in Sage when payments are raised.
If a Purchase Credit Note is received this can be matched in Protean in the same way. Any value against a Misc line flagged as ‘labour’ will be updated to the CIS Labour code in Sage.