Microsoft Dynamics 365 Business Central is a powerful operations management software solution that can be used to support various industries, including the construction industry.
Below is more on how to manage the Construction Industry Scheme (CIS) with Business Central – one of the key requirements of the building industry:
What Is The Construction Industry Scheme (CIS)?
The Construction Industry Scheme (CIS) is a scheme for tax deduction operated by the HM Revenue and Customs (HMRC) in the UK. It helps to regulate the tax and National Insurance contributions paid to subcontractors.
Once a construction company is set up, CIS is used to deduct tax at the source of payment and ensures the company pays the relevant tax. CIS-registered companies pay 20% tax deductions rather than 30%, so there is an incentive to be part of the scheme.
Managing payments against the CIS scheme can be complex. This is where Business Central can help:
How Can You Manage CIS With Business Central:
Construction companies can manage CIS wth Business Central in the following ways:
Set Up CIS Tax Codes In Business Central
Construction companies can use Business Central to set up CIS tax codes to reflect the different rates of deduction that apply to subcontractors. This will enable them to accurately calculate and report on tax deductions from payments made to subcontractors (giving more accurate P&L data).
Set Up Subcontractor Records
Subcontractor records can be created and stored in Business Central to keep track of key details. This includes information such as name, address, tax reference number, and CIS registration status. This ensures that payments are made to registered subcontractors and allows subcontractors to accurately calculate their own tax deductions.
Create Purchase Invoices And Apply CIS Tax Codes
When you receive an invoice from a subcontractor, Business Central allows for the creation of a purchase invoice that applies the appropriate CIS tax code to it. This ensures that the right tax is deducted from payments.
Record Payment To Subcontractor
Once a subcontractor has been paid, Business Central will record the information and specify the amount of tax that was deducted. This helps construction companies to keep track of their CIS deductions and ensure that the correct tax is eventually paid to HMRC.
Generate Reports On CIS With Business Central
Business Central also allows construction companies to generate CIS reports that show the amount of tax deducted from subcontractor payments and the total amount paid to each subcontractor. These reports can be used to simplify the completion of required monthly CIS returns and ensure that a construction company is complying with HMRC's requirements.
By following these steps, you can use Business Central to manage the Construction Industry Scheme and ensure that you comply with HMRC's requirements.
Taking Care Of More Than Just The Construction Industry Scheme With Business Central
Being able to manage CIS with Business Central is just one of the ways that Microsoft's ERP can support the needs of construction companies.
As such, construction companies should consider Microsoft’s ERP software as a fully functional alternative to the bespoke (and often expensive) software that’s targeted at the construction industry.
Akita develops business transformation and management solutions for the construction industry. For more information or to arrange a demo, please get in touch: