United Kingdom¶

Configuration¶

Install the UK - Accounting and the UK - Accounting Reports modules to get all the features of the UK localization.

Chart of accounts¶

The UK chart of accounts is included in the UK - Accounting module. Go to Accounting ‣ Configuration ‣ Accounting: Chart of Accounts to access it.

Setup your CoA by going to Accounting ‣ Configuration ‣ Settings ‣ Accounting Import section and choose to Review Manually or Import (recommended) your initial balances.

Taxes¶

As part of the localization module, UK taxes are created automatically with their related financial accounts and configuration.

Go to Accounting ‣ Configuration ‣ Settings ‣ Taxes to update the Default Taxes, the Tax Return Periodicity or to Configure your tax accounts.

To edit existing taxes or to Create a new tax, go to Accounting ‣ Configuration ‣ Accounting: Taxes.

Making Tax Digital (MTD)¶

In the UK, all VAT-registered businesses have to follow the MTD rules by using software to submit their VAT returns.

The UK - Accounting Reports module enables you to comply with the HM Revenue & Customs requirements regarding Making Tax Digital.

Register your company to HMRC before the first submission¶

Go to Accounting ‣ Reporting ‣ Tax report and click on Connect to HMRC. Enter your company information on the HMRC platform. You only need to do it once.

Periodic submission to HMRC¶

Import your obligations HMRC, filter on the period you want to submit, and send your tax report by clicking Send to HMRC.

Periodic submission to HMRC for multi-company¶

Only one company and one user can connect to HMRC simultaneously. If several UK-based companies are on the same database, the user who submits the HMRC report must follow these instructions before each submission:

1. Log into the company for which the submission has to be done.

2. Go to General Settings, and in the Users section, click Manage Users. Select the user who is connected to HMRC.

3. Go to the UK HMRC Integration tab and click Reset Authentication Credentials or Remove Authentication Credentials button.

4. Register your company to HMRC and submit the company’s tax report.

5. Repeat the steps for other companies’ HMRC submissions.

Bacs files¶

Bacs files are electronic files used in the UK to process payments and transfers between bank accounts.

To enable the use of Bacs files, make sure the UK BACS Payment Files module is installed, then:

1. Configure your Bacs Service User Number:

   1. Go to Accounting ‣ Configuration ‣ Settings and scroll down to the Customer Payments section.

   2. Enter your Service User Number under BACS and manually save.

2. Configure your bank journal:

   1. Go to Accounting ‣ Configuration ‣ Journals and select your bank journal.

   2. In the Journal Entries tab, configure the Account Number and Bank fields.

   3. In the Incoming Payments and Outgoing Payments tabs, make sure the BACS Direct Debit payment method is enabled.

3. Configure the contacts for whom you wish to use Bacs files: Access the contact form and, in the Accounting tab, click Add a line and fill in the Account Number and Bank fields.

Bill payments¶

To generate Bacs files for bill payments, set the Payment Method to BACS Direct Debit when registering vendor payments.

Then, create a vendor batch payment:

1. Go to Accounting ‣ Vendors ‣ Batch Payments, and click New.

2. Select the bank journal in the Bank field, set the Payment Method to BACS Direct Credit, and select a BACS Processing Date.

3. Optionally, you can also:

   • select a BACS Expiry Date;

   • enable BACS Multi Mode to process the payments on their individual date.

4. Click Add a line, select the payments you want to include, click Select, then Validate.

Once validated, the Bacs file is available in the chatter. You can also Re-generate Export File if you need a new Bacs file for that batch payment.

Invoice payments¶

Before generating Bacs files for invoice payments, you must first create a BACS Direct Debit Instruction: Go to Accounting ‣ Customers ‣ BACS Direct Debit Instructions and click New. Select a Customer, their IBAN, and the Journal you wish to use.

To generate Bacs files for invoice payments, set the Payment Method to BACS Direct Debit when registering invoice payments.

Then, create a customer batch payment:

1. Go to Accounting ‣ Customers ‣ Batch Payments, and click New.

2. Select the bank journal in the Bank field, set the Payment Method to BACS Direct Credit, and select a BACS Processing Date.

3. Optionally, you can also:

   • select a BACS Expiry Date;

   • enable BACS Multi Mode to process the payments on their individual date.

4. Click Add a line, select the payments you want to include, click Select, then Validate.

Once validated, the Bacs file is available in the chatter. You can also Re-generate Export File if you need a new Bacs file for that batch payment.

Employment Hero payroll¶

If your business is already up and running with Employment Hero, you can use our connector as an alternative payroll solution.

CIS deduction¶

The Construction Industry Scheme deduction (CIS deduction) is a tax deduction system used in the UK designed specifically for the construction industry. It requires contractors to deduct a percentage of payments made to subcontractors and forward these deductions to HM Revenue and Customs (HMRC). These deductions apply only to the labor portion of the payments and serve as advance payments towards the subcontractor’s tax and National Insurance contributions. Contractors are required to register for the scheme, but subcontractors are not. However, subcontractors who are not registered face higher payment deductions. Under the CIS, contractors must deduct 20% from payments to registered subcontractors, while the deduction increases to 30% for unregistered ones.

As a contractor, you are required to register with the CIS before hiring subcontractors and to check whether each subcontractor is registered with the CIS. You must also maintain records of all payments and deductions and submit monthly returns to HMRC, including the following details:

• information about the subcontractors

• records of payments made and any deductions applied

• a declaration confirming that the employment status of all subcontractors has been reviewed

• a declaration confirming that all subcontractors requiring verification have been verified

To submit Monthly Returns to HMRC, install the UK - Construction Industry Scheme module.

Monthly returns¶

Monthly returns only work for vendor bills and vendor refunds. To submit a complete return to HMRC, several steps must be followed to report all payments made to subcontractors under the scheme during the previous tax month:

• Contractor (company) setup

• Subcontractor setup

• Vendor bills

• Monthly returns sending

Contractor (company) setup¶

To configure your company’s HMRC information, go to the Settings app and, in the Companies section, click Update Info. Open the HMRC tab and configure the information in the HMRC Credentials and the Contractor details sections. All fields are mandatory.

Subcontractor setup¶

Access the subcontractor’s contact form and select the Accounting tab. In the HMRC Details section, enable the Construction Industry Scheme option; the CIS-related fields are displayed.

By default, the Deduction rate is set to 30%. To modify it, first enter the Verification Number provided by HMRC when verifying the subcontractor’s status, then update the Deduction Rate accordingly.

Vendor bills¶

The appropriate CIS tax must be applied to labor items on vendor bills based on the subcontractor’s Deduction Rate: 0% CIS, 20% CIS or 30% CIS. To apply the rate, go to the Invoice Lines section of the vendor bill and select the appropriate CIS tax rate in the Taxes column of the labor items.

Monthly returns sending¶

On the 6th of each month, Odoo sends a reminder email to submit a monthly return to HMRC. The recipient email address is the one entered in the company Email field. To send monthly returns to HMRC, go to Accounting ‣ Reporting ‣ Tax Return and follow these steps:

1. Click Report: and select CIS Deduction (GB).

2. In the (calendar) date selector, the Tax Period is automatically adjusted to match the CIS deduction period.

3. Click on Send to HMRC in the top-left corner.

4. In the CIS monthly return window, select the required options in the Declaration section:

   • Employment Status: To declare that the employment status of all subcontractors has been reviewed.

   • Subcontractor Verification: To declare that all submitted subcontractors requiring verification have been verified.

   • Inactivity Indicator: To declare temporary inactivity.

5. In the Information correct declaration section, confirm the information is true and complete by checking the box. Then, enter the Password used in the HMRC Credentials section during contractor setup.

6. Click Send to prompt Odoo to request HMRC to initiate the transaction.

When HMRC replies to a transaction, Odoo automatically notifies the user who submitted it by email. The email informs them that the response is available in the company’s chatter with an attached XML document for download. Both the electronic and paper versions of the HMRC receipt should be retained. If an error is detected, a new submission is required to comply with HMRC requirements.