CIS & RCT Retention Tax
CIS & RCT Retention Tax provide capabilites to handle forms of retention tax on work performed by subcontractors where you can calculate, retain, post, and report the retained amounts according to the needs per supplier.
- CIS - Construction Industry Scheme for UK, and
- RCT - Relevant Contract Tax for Ireland).
The purpose of the schemes is designed to withhold tax that applies to certain payments by principal contractors to subcontractors, thus on vendor level in Business Central. The rates vary across states and legislations and can be adjusted on a detailed level using the Retention tax app.
Setup and configuration
A separate ledger entry is created in Business Central, similar with the VAT Ledger entries functionality, together with a retention tax posting setup and settings on each vendor (business posting setup) and line item/resource/G/L Account.
Retention tax entries
A new table and page containing the following information fields are added:
| Field | Description |
|---|---|
| Entry no. | Unique entry number counting for each new record. |
| Open | Boolean (true/false), defaulted to value true. To be changed upon reporting. |
| Posting date | Date field, with data from purchase lines. |
| Document date | Date field, with data from purchase lines. |
| Document no. | Text field, with data from purchase lines. |
| Vendor no. | Text field, with data from purchase lines. |
| Line amount | decimal field, with data from purchase lines. |
| Retention tax amount | Decimal field, with data from purchase lines. |
| Retention tax % | Decimal field, with data from purchase lines. |
| Tax Reference Number | Text field with data retrieved from vendor card. |
| Accounts Office Reference Number | Text field with data retrieved from vendor card. |
| Employer Reference Number | Text Field with data retrieved from vendor card. |
| Verification Reference Number | Text Field with data retrieved from vendor card. |
| Site Identification Number | Text field with data retrieved from vendor card. |
| Retention tax business posting group | See specification below. |
| Retention tax product posting group | See specification below. |
For every purchase line for a document related to a vendor where the Registered for retention tax field is set to true (see section 2.2.1) an entry is created in the retention tax entries.
Retention tax business posting groups
Choose the 
, enter Retention tax business posting groups, and then choose the related link.
Set up code and description where retention tax business groups need to be created for selection on the vendor card for the use of retention tax, and for identifying each retention entry in the retention tax entries.
Retention tax product posting groups
Choose the , enter Retention tax business posting groups, and then choose the related link.
Set up code and description where retention tax posting groups needs to be created to be selected for use of retention tax on item card, G/L account, resource and directly on the purchase lines, for identifying each retention entry.
Retention tax setup
The retention tax setup page contains the following fields:
| Field | Description |
|---|---|
| Retention tax business posting group | Looking up values in the table above in 2.2. |
| Retention tax product posting group | Lookup up values in the table above in 2.3 |
| Tax rate % | % field used for calculation of the retention amounts for the applicable combination of the retention tax business posting groups and retention tax product posting groups |
| G/L tax amount account | Lookup to G/L Account, defaulted filtered to liability balance sheet accounts for selecting the G/L account for retention tax posting. |
Setup on vendors, and items, g/l accounts resource cards and purchase lines
Vendor card
New fields are added on the vendor card:
| Field | Type | Description |
|---|---|---|
| Registered for retention tax | True/False | If set to True, then retention entries should be calculated and posted for that vendor. |
| UTR (Unique Tax Reference) Number | Text field | Used for identification on the retention tax entries. Visible only if field “Registered for retention tax” is set to True. |
| Accounts Office Reference Number | Text field | Used for identification on the retention tax entries. Visible only if field “Registered for retention tax” is set to True. |
| Employer Reference Number | Text Field | Used for identification on the retention tax entries. Visible only if field “Registered for retention tax” is set to True. |
| Verification Reference Number | Text Field | Used for identification on the retention tax entries. Visible only if field “Registered for retention tax” is set to True. |
| SIN (Site Identification Number) | Text field | Used for identification on the retention tax entries. Visible only if field “Registered for retention tax” is set to True. |
| Tax withheld | calculated decimal field showing the amount of tax withheld in the retention tax entries. | Clickable for a filtered drill down to retention tax entries. Visible only if field “Registered for retention tax” is set to True. |
| Retention tax business posting group | Field with option to select a value from the Retention tax business posting group table (see 2.2). | Visible only if field “Registered for retention tax” is set to True. |
New fields are visible as described above based on that the option “Registered for retention tax” is selected or placed under a new fast tab on the vendor card.
Item card
New field is added on item card for Retention tax Product posting group with lookup to table described in 2.3.
If purchase lines for the item are created on a document where the vendor has the field “Registered for retention tax” set to True, the Retention tax Product posting group is populated on the line automatically using the value from the item card.
G/L Account card
New field is added on G/L Account card for Retention tax Product posting group with lookup to table described in 2.3.
If purchase lines with the G/L account are created on a document where the vendor has the field “Registered for retention tax” set to True, the Retention tax Product posting group is populated on the line automatically using the value from the field on the G/L Account card.
Resource card
New field is added on resource for Retention tax Product posting group with lookup to table described in 2.3.
If purchase lines for the resource are created on a document where the vendor has the field “Registered for retention tax” set to True, the Retention tax Product posting group should be populated on the line automatically using the value from the resource card.
Purchase lines
The following new fields are added to the purchase lines:
- Retention tax Business posting group
- Retention tax Product posting group
- Retention tax % (shows the rate retrieved from the Retention tax posting setup)
- Retention amount (shows the retention amount, calculated as the line-amount multiplied with retention tax %)
Functionality
Creating purchase lines
When a new document is created for a vendor where “Registered for retention tax” is set to True, the following applies:
- All purchase lines except with the type of Comment, Fixed Asset and Charge (Item) automatically gets the Retention tax Business posting group set from the vendor card.
- All purchase lines except with the type of Comment, Fixed Asset and Charge (Item) automatically gets the Retention tax Product posting group set from the related record card (G/L Account/Item/Resource).
- A lookup is done for the combination of the Retention tax Business posting group and the Retention tax Product posting group to the table Retention posting setup, retrieving the retention tax % and retention tax G/L Account.
- If the combination is missing, an error message is shown requiring the fields to be corrected in the setup.
Posting purchase lines
Upon posting a document with retention tax, retention tax entries are created for each line with the following information from the purchase line:
- Posting date
- Document date
- Document no
- Vendor no
- Line amount
- Retention amount
- Retention % rate
- Retention tax business posting group
- Retention tax product posting group
And the following information is added to the retention tax line from the vendor card:
- UTR (Unique Tax Reference) Number
- Accounts Office Reference Number
- Employer Reference Number
- Verification Reference Number
- SIN (Site Identification Number)
Upon posting, an additional amount is posted according to the following;
- In credit to the G/L Account specified in the Retention tax posting setup
- Deducting the total from the amount to post to accounts payable.
- All other entries (VAT, cost postings etc.) should be unaffected.
Report of retention tax
New report is added for presenting data from retention tax entries.
The report request page has the possibility to filter on the fields in the retention tax entries.
The report request page has an option to “Close reported entries”. This option changes the included entries in the report to open = false.
Report presents data grouped by Vendor with records shown on detailed level and summary by vendor.
App licensing and cost
CIS & RCT Retention Tax is licensed per installed environment and charged annually in accordance with the current price list.