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Oracle Public Sector Financials (International) Implementation Guide
Release 12.1
Part Number E13417-04
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Construction Industry Scheme Setup

Overview

Construction Industry Scheme (CIS) is a withholding tax scheme that applies to contractors and subcontractors in the construction industry.

Prerequisites

Before you set up Construction Industry Scheme, you must:

Data Migration

You migrate the existing Construction Industry Scheme suppliers by running the IGI: CIS2007 Data Migration Process. This process migrates the subcontractor Unique Taxpayer Reference (UTR), which is the first 10 digits of the certificate number, and the National Insurance Number (NINO).

To run the Data Migration process:

  1. Click CIS: Processes and Reports in the OPSF(I) Construction Industry Scheme 2007 menu.

  2. Select the Single Request radio button.

  3. Click OK.

    The Submit Request window appears.

  4. In the Name field, select IGI : CIS2007 Data Migration Process from the list of values.

  5. Click Submit.

After completing this process, contractors must continue with the subcontractor verification process.

CD-ROM Data Upload Process

Contractors must verify the subcontractor’s status. To ease the verification process, Inland Revenue provides a CD-ROM that contains a list of verified subcontractors who need not be verified for payment in the Construction Industry Scheme. This list of verified subcontractors is available on the CIS33 CD-ROM. See: Subcontractor CD-ROM for more information.

To verify the subcontractor's status, insert the CD-ROM and run the CD-ROM Upload Process. The CD-ROM Upload Process tries to match each subcontractor with the subcontractor in PO_VENDORS using the CD-ROM subcontractor UTR. The CD-ROM upload process updates matched subcontractors and reports any unmatched subcontractors. If a match is found, then the PO_VENDORS and PO_VENDOR_SITES_ALL tables are updated with the Withholding Tax Group, National Insurance Number, or Company Registration Number.

Note: You must rectify the errors, if any before running the CD-ROM Upload Process again. Due to potential data corruption issues, the subcontractor name or trading name on the CD-ROM is never updated for any matching subcontractors.

It is recommended that you run the CIS Registered Suppliers Listing report to obtain a list of subcontractors before executing the CD-ROM Data Upload Process.

To run the CD-ROM Upload process:

  1. Click CIS: Processes and Reports in the OPSF(I) Construction Industry Scheme 2007 menu.

  2. Select the Single Request radio button.

  3. Click OK.

    The Submit Request window appears.

  4. In the Name field, select IGI : CIS2007 CD-ROM Data Upload Process from the list of values.

    The Parameters window appears.

  5. Select the Upload Option as follows:

  6. Click OK.

  7. Click Submit.

CD-ROM Update Process Report (CP output)

A report is generated after the CD-ROM Data Upload Process processes all the uploaded subcontractors. The subcontractors are assigned the following categories in the report:

Related Topics

Enabling Oracle Public Sector Financials (International) Features Procedure

Construction Industry Scheme Setup Steps

This table lists setup steps for Construction Industry Scheme. These steps are listed in order of completion.

Step Number Step Description Required or Optional
1 Define Tax Authority Required
2 Define Tax Codes and Withholding Tax Groups Required
3 Define Withholding Tax Special Calendar Required
4 Define Contractor Details Required
5 Define Suppliers Required
6 Define Keystore Required
7 Set Up Profile Options Required

Define Tax Authority

The tax authority is required for the withholding tax reporting process and payment of taxes withheld from the subcontractors to the Inland Revenue. Define Inland Revenue as a supplier in Oracle Payables with a supplier type and business type of tax authority.

Related Topics

Entering Suppliers, Oracle Payables User Guide

Define Withholding Tax Codes and Groups

Withholding tax codes and groups are used to store the tax rates to be used for calculating the withholding tax for a subcontractor. There are three standardized tax codes or groups for Construction Industry Scheme: Gross, Net and Unmatched.

Define the withholding tax codes and groups in Oracle Payables for Construction Industry Scheme tax codes or groups by selecting the Create Tax Group in the Withholding Tax Details window.

Note: You must assign the defined withholding tax groups to the IGI: CIS Withholding Tax Group profile options.

Related Topics

Tax Codes, Oracle Payables Implementation Guide

Define Withholding Tax Special Calendar

The Construction Industry Scheme tax reporting year is from April to April and the reporting month is from the sixth of the current month to the fifth of the following month. For example, the reporting month for April runs from April 06 to May 05.

Select the Special Calendar option to define a special calendar for Construction Industry Scheme in Oracle Payables.

Note: Assign the CIS special calendar to the IGI: CIS Calendar profile option.

Related Topics

Special Calendar, Oracle Payables Implementation Guide

Define Contractor Details (Reporting Entity)

Contractor information is required to verify subcontractor, file monthly returns, and reports. Define contractors as a Reporting Entity in Oracle Payables. The Construction Industry Scheme filing process requires additional contractor details for Inland Revenue.

The standard reporting entity window is extended to capture this additional information. Use the Extended Reporting Entity window to define the additional contractor details.

Note: If necessary, you can define a reporting entity for each organization.

Extended Reporting Entity Window

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Extended Reporting Entity Window Description

The following table describes the Extended Reporting Entity window.

Extended Reporting Entity Window
Field Description
Operating Unit operating unit that the reporting entity belongs to
Name reporting entity name
Unique Taxpayer Reference unique 10 digit numeric number assigned to the company when the company is set up as a tax payer; unique taxpayer reference is not the same as the VAT Registration Number or the Company Registration Number; Inland Revenue validates this reference number using an algorithm.
Accounts Office Reference reference provided to companies by Inland Revenue when they register for Pay As You Earn (PAYE) or Construction Industry Scheme. The format for this field must be as follows:
  • Characters 1-3 must be numeric. Leading zeros should be used to pad out characters 1-3 and 6-13, if necessary.

  • Character 4 must be P.

  • Character 5 must be an alphabet.

  • Characters 6-13 must be alphanumeric. Leading zeros should be used to pad out characters 1-3 and 6-13, if necessary.


For example, you can enter the value 931PQ123456 in this field.
Tax Office Number tax office number that Inland Revenue provides and must be included in the IRHeader of the XML request.
PAYE Reference Number PAYE reference number that Inland Revenue provides, which must be included in the IRHeader of the XML request.
CIS Sender ID required if the contractor uses online XML submissions. Inland Revenue provides CIS Sender ID when the contractor registers for online XML submissions.

Define Suppliers

Before verifying subcontractors with Inland Revenue, you must define subcontractors as Suppliers for Construction Industry Scheme using the Suppliers page in Oracle Payables and enter additional information specific to Construction Industry Scheme using the Extended Suppliers window. The following table describes the information that you must enter or select in the standard suppliers window:

Field Description
Type (in the Classification tab) Enter Sole Trader, Partnership, Trust, or Company.
Primary Pay Site Enter at least one address line and country. The characters in the address line must not exceed 35.
Allow Withholding Tax (in the Withholding Tax tab) Enable the Allow Withholding Tax field to report payments from this site in the Monthly Returns, Subcontractor Statement of Payment and Deduction, and Subcontractor Verification reports.
At the supplier level, the value for both Invoice Withholding Tax Group and Payment Withholding Tax Group should be same.

Note: The Construction Industry Scheme module does not support the 'At Both Invoice and Payment Time' withholding tax option, so you should not select this option while setting up the withholding tax on the Payables Options window.

Nominees and Debt Factors Nominees and Debt Factors are setup as suppliers and then associated to a subcontractor as the parent supplier. For example if Subcontractor A and Nominee A are set up as Construction Industry Scheme suppliers and Subcontractor assigns payments to Nominee A, then in Nominee A's supplier window, the Parent Supplier Name field contains Subcontractor A’s name. This step associates the relationship between the two suppliers.
The classification type for a nominee must be Company, Sole Trader, Partnership, or Trust. The classification type for a Debt Factor can be anything other than Company, Sole Trader, Partnership, or Trust.

Use the Extended Suppliers window to enter additional subcontractor details that Inland Revenue requires.

Extended Suppliers Window

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The following table describes the Extended Supplier Window.

Field Description
Supplier Name Displays the supplier name.
Supplier Number Displays the supplier number.
Business Type Additional business types are Nominee and Debt Factor when subcontractors assign their payments.
CIS Enabled Select this option to indicate that suppliers are subject to the Construction Industry Scheme. The combination of the CIS Enabled and Allow Withholding Tax indicates a CIS supplier.

Note: During the upgrade process, the CIS Enabled option is automatically selected when migrating the old suppliers to the Extended Suppliers window.

Subcontractor Trading Name Enter the partner's trading name for partnership
Salutation Enter the salutation to address the subcontractor.
Subcontractor First Name Enter the subcontractor's first name.
Subcontractor Second Name Enter the subcontractor's second name.
Subcontractor Surname Enter the subcontractor's surname.
Subcontractor Unique Taxpayer Reference Enter the partners's Unique Taxpayer Reference for partnership business type. For existing Construction Industry Scheme subcontractors, the Unique Taxpayer Reference (UTR) is derived from the CIS vouchers. UTR is the first 10 digits of the Certificate Number on CIS23 or CIS25, or all 10 digits of the Reference Number on CIS25. HRMC validates this reference number using an algorithm.

Note: This field is required if the business type is Sole Trader, Company, Trust, or Partnership.

Subcontractor Company Registration Number Company Registration Number is created when registering a company and is used for filing corporate financial statements. This field is required if the business type is company.
The format must be either of the following:
  • Characters 1-2 must be alpha and characters 3-8 must be numeric. The numeric field must have at least one digit and not more than six. For example: AA345678.

  • Characters 1-8 must be numeric and at least one digit and must be lesser than 8. For example: 77777777.

National Insurance Number (NINO) The National Insurance Number (NINO) is required if the subcontractor is an individual in a partnership.

Note: For contractors using the CD-ROM provided by Inland Revenue, the NINO serves as a cross-reference for Construction Industry Scheme suppliers.


The format must be as follows:
  • First character must be alpha excluding D, F, I, Q, U, V.

  • Second character must be alpha excluding D, F, I, O, Q, U, V.

  • Last character must be A-D or space. For example: AANNNNNNA

Partnership Unique Tax Reference Number Enter the partnership unique tax reference number only if the business type is Partnership.
Partnership Name Enter partnership name only if the business type is Partnership.
Matched / Unmatched Status This field indicates if the subcontractor's details match with the Inland Revenue. If the records match, then the Withholding Tax Group, Verification Number, CIS Verification Date, and Verification Request ID fields are automatically updated. An unmatched status indicates that Inland Revenue is unable to match the subcontractor details with their records. If the subcontractor is submitted with a Verify Action Indicator, then the above fields are populated. However, if the subcontractor's Action Indicator is set to Matched, no record appears and no fields populate. This is an important field as it identifies the subcontractor's verification status. This field automatically populates when an XML response is received from Inland Revenue for any AWT-enabled site. If the subcontractor is verified manually, the contractor must update this field.
Verification Number If the subcontractor is verified manually, then you must enter the contractor details in the following format:
  • First character must be V followed by 10 numbers including zero and one or two letters.

  • If the last two characters are letters, then the acceptable letter for a 12 and 13 character verification format is A-Z except I & O.


This field automatically populates if the subcontractor is verified by the XML reply from Inland Revenue for any AWT-enabled site in above format.

Note: You must enter the unique verification number for subcontractors paid at the Higher Deduction rate.

CIS Verification Date This field automatically populates if the subcontractor was verified by the XML reply from Inland Revenue for any AWT enabled site.
Verification Request ID The concurrent request ID for generating and sending the Verification XML request to the HMRC. This field automatically populates if the subcontractor is verified by the XML reply from Inland Revenue for any AWT-enabled site.
Withholding Tax Group The rate that designates the subcontractor's rate of deduction.

Related Topics

Entering Suppliers, Oracle Payables User Guide

Define Keystore

A keystore is a database of private keys and certificates. The keystore holds the public certificate issued by Inland Revenue. This certificate authenticates any communication between the client server and the Inland Revenue gateway server.

Before creating a keystore, you must:

To download the CA certificate:

  1. Navigate to the secure URL: https://secure.gateway.gov.uk/submission.

  2. Double click on the lock icon.

    The browser displays the Certificate dialog box that describes the Certificate used for this web site.

  3. Click the Certificate Path tab and select the first entry from the list of certificates.

  4. Click View Certificate to display a second Certificate dialog box.

  5. Click the Details tab on the Certificate window.

  6. Click Copy to File to display the Certificate Manager Export wizard.

  7. In the Certificate Manager Export wizard, select Base64 encoded X.509 (.cer) as the export format. Save the certificate to a text file.

The Certification Revocation List (CRL) contains expired certificates. You must download the Certification Revocation List and store it in the specified path.

To download the CRL:

  1. Navigate to the secure URL: https://secure.gateway.gov.uk/submission.

  2. Double click on the lock icon.

    The browser displays the Certificate dialog box that describes the Certificate used for this web site.

  3. Click the Certificate Path tab and select the second entry in the list of certificates.

  4. Click View Certificate to display a second Certificate dialog box.

  5. Click the Details tab on the Certificate window.

  6. Toggle down to see the CRL Distribution Points.

  7. Copy the URL.

  8. Open the location.

  9. Save the file to the required path.

To create a keystore:

  1. Download the public key CA certificate.

  2. Download Certificate Revocation List (CRL) File.

  3. Create the keystore using Keytool.

  4. Import the Certificate.

Keytool is a key and certificate management utility to create the keystore that holds the private keys and certificates. The keystore protects the private keys with a password. Usage of the Keytool syntax can be viewed by typing keytool from java/bin prompt. The keytool syntax is as follows:

keytool -genkey -alias <subjectkey>-keypass <mykeypasswd>
-keystore <mykeystore>  -storepass <storepass>

The above syntax creates a key entry referenced by the alias <subjectkey>, protected by the password <mykeypasswd>, in the keystore <mykeystore>.

You need the key entry password to use the alias <subjectkey> every time. The store password <storepass> protects the keystore <mykeystore>. The profile options for storing the password are as follows:

To create the keystore and hold the Inland Revenue certificate, use the keytool syntax as mentioned and specify the following:

The next step is to import the certificate that you downloaded into the keystore. The keytool syntax is used again and the syntax is as follows:

keytool -import -keystore <mykeystore> -file <mycertificate>-alias 

<subjectkey1>

The alias must be different from the subjectkey to create the keystore as in the following example:

keytool -import -keystore /home/ciskeystore -file /home/newcer.cer -alias cis2007cert