Can anyone help with CIS, Sage & VAT?

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Tracy
Tracy Registered Posts: 1 New contributor 🐸
I am trying to grasp the CIS side of things in my new job for a Subcontractor that does work for us and i am confused! :huh:

If i receive an invoice from the "subby" for e.g.

Labour 100.00
VAT 17.50
TOTAL 117.50

CIS @ 20% 20.00

I would make a payment to the "subby" for £97.50 but on Sage the VAT on that payment is only £14.52 (£97.50 x 7/47)! Do i have to manually adjust the VAT on this "subby" every time i pay him or am i missing something?

I hope someone can help..... pleeeeeeeease! :crying:

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  • Emma1708
    Emma1708 Registered Posts: 217 Dedicated contributor 🦉
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    I think where you are getting confused is how to input and pay his invoice through sage is that right?

    You input the full invoice as he has sent it, and pay in full in sage - even though he is not getting all of the invoice amount. You give him this remittance showing full payment then at the end of the month you type him a statement showing payments made and deductions taken.

    Once you have paid him in sage you then do a bank receipt of the £20 to a CIS tax deducted code. This corrects your bank account. When you are ready to do your payment following the monthly return you do a bank payment from this code to clear it. Hope this makes sense
  • Jan
    Jan Registered Posts: 654 Epic contributor 🐘
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    I enter the invoice as normal and then create a credit note for the amount of CIS due - post this to nominal 2211. There is no VAT involved in this transaction so use T9. Then when you pay him and create remittance slip it shows how much he is being paid. After the 5th of the month a typed statement is sent out showing all deductions/payments made up to the 5th of the month. He should keep this for his own records.
    When payment is made to HMRC with PAYE/NIC for employees CIS amount is posted again to 2211 - should clear once a month.
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