The Construction Industry Scheme (CIS) is a tax scheme specific to the construction industry, designed for companies that subcontract. CIS can be enabled directly within Commusoft to calculate deductions, even if you are not using an integrated accounting package. By enabling CIS, you ensure accurate tax handling, compliance with regulations, and seamless financial data management within Commusoft.

If your accounting package supports CIS integration, enabling CIS in both systems allows for even greater accuracy and efficiency through automated data transfer.

View Setting

➡️ Navigate to Profile icon > Settings > Invoices > CIS Percentage > View

CIS Percentage

To enable CIS in Commusoft

Select CIS Registration Option:
- Choose the appropriate CIS option based on your registration:
  - Not CIS Registered: For companies that are either gross registered or not required to deduct CIS.
  - 20%: For standard CIS-registered companies.
  - 30%: For higher-rate CIS-registered companies.
Click Save.

For more detailed information about the Construction Industry Scheme, please refer to the UK Government’s official page on CIS.

Enabling CIS in your Accounting package

To fully integrate CIS, you must enable it in your accounting package. This ensures accurate tracking and seamless data transfer between systems.

Xero

Set up CIS in your Xero organization.

Follow Xero’s documentation to enable CIS.
Once enabled, relevant nominal codes will automatically appear in the Chart of Accounts in Xero.

🔗️ Set up CIS in your Xero organisation

Add Domestic Reverse Charge (DRC) Tax Rates in Xero

Add the DRC tax rates in Xero to ensure payments are processed correctly.
Once added, the DRC rates will appear in the Tax Rates section in Xero.

🔗️ To ensure DRC payments are correctly processed, add the DRC tax rates in Xero. These rates will then appear with your Tax Rates.

FreeAgent

Enabling CIS in FreeAgent

To enable CIS in FreeAgent, please follow the steps outlined in FreeAgent’s help article:

🔗 CIS Subcontractors - FreeAgent Help

Configuring CIS in Commusoft

To ensure CIS records send correctly from Commusoft to FreeAgent, the nominal code for the CIS line item must match the correct code in FreeAgent:

061: 0%
062: 20%
063: 30%

Sage Business Cloud Account

Activate CIS in Sage:
- Follow Sage’s official guide to enable CIS in your account.
- 🔗 Sage Business Cloud Accounting: Set-up CIS

Create a Nominal Code in the Chart of Accounts:
- Navigate to Settings > Chart of Accounts and create a new nominal code with the following details:
  - Ledger Name: Choose a name (e.g., "CIS Labour Income").
  - Display Name: Choose a name for display purposes.
  - Nominal Code: 2151
  - Category: Sales.
  - VAT Rate: Set the VAT rate as required.
  - Enable CIS on this ledger account: Check this box and select CIS Labour from the dropdown.
  - Visibility: Check Sales to make it visible for sales transactions.
- Save the new nominal code.
Add the CIS Labour Income Nominal Code in Commusoft:
- Navigate to Profile Icon > Finance > Nominal Accounts in Commusoft.
- Locate or add the nominal code for CIS Labour Income to align with Sage’s 2151 nominal code.
Enable CIS and Domestic Reverse Charge (DRC) for Contacts in Sage:
- Set up individual contacts as subcontractors or contractors using the following Sage guides:
  - 🔗 Set up a contact as a subcontractor
  - 🔗 Set up a contact as a contractor
- While setting up the contact, ensure the Account Default is linked to the nominal code 2151.

Accounting Integration Limitations for CIS and DRC

While Commusoft supports CIS and Domestic Reverse Charge (DRC) within its system, the integration with certain accounting packages does not support these features. If you are using one of the following accounting packages, CIS and DRC handling must be managed directly within your accounting software, as the integration does not include these capabilities:

QuickBooks Online
QuickBooks Desktop
Sage 200
Kashflow

What This Means for You

If your company relies on CIS or DRC for tax handling and you use one of the above accounting packages:

Enable CIS and DRC in Commusoft: Use Commusoft to calculate and apply CIS deductions and handle Domestic Reverse Charge within invoices and payments.
Manually Manage CIS and DRC in Your Accounting Package: Enter CIS-related deductions and DRC adjustments directly into your accounting package.

Recommendations

For accurate financial tracking and compliance, ensure your nominal codes and financial records are aligned between Commusoft and your accounting package. While the integration can handle standard accounting transactions, all CIS and DRC-related data must be managed manually in the accounting software.

If you require a fully integrated solution for CIS and DRC, consider switching to an accounting package that supports these features, such as Xero or Sage Business Cloud Accounting.

Add the CIS nominal in Commusoft

To finalize the setup, ensure your nominal codes in Commusoft are configured correctly.

Nominal codes