Home For accounting professionals General accounting discussion
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚


CIS and VAT?

JoBoJoBo Settling In NicelyRegistered Posts: 16
Hi there,
My OH is a sole trader and some of his customers pay him using the CIS scheme, he has now become vat registered and im unsure of the implications.

A recent invoice has been sent showing materials, labour and vat, however it looks like it has been paid by taking 20% off the labour plus vat.

Surely as the vat does not belong to him they should have just taken 20% from the net labour figure?

Or have i got it totaly wrong:001_unsure:

Also what is the best way to account for the cis taken using sage? As it is currently showing as a part paid invoice.

Thanks

Comments

  • T JT J Feels At Home Registered Posts: 26
    Hi

    The contractor should take the 20% CIS tax off the labour element only.

    e.g. labour = 60, materials = 40, VAT = 15
    total invoice amount is 115
    tax is 12 (60x20%)

    payment from contractor will be 103


    Re Sage - I don't use sage so I can't advise which account to post it to. I have seen similar posts on here about CIS and Sage.


    Hope this helps

    TJ
  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    I do this type of invoice and suggest the following as a breakdown:
    Labour £100
    Materials £100
    Sub-total £200
    VAT £30
    Total Invoice £230

    Then on CIS statement you would need to show something like this:
    Total less VAT £200
    less materials £100
    Balance £100
    CIS deduction at £20% = £20

    Total invoice £230
    less CIS deduction £20
    Amount payable £210

    Hope that helps too.
  • groundygroundy Trusted Regular Registered Posts: 495
    When using SAGE allocate the full gross amount prior to CIS as a Sales Receipt and therefore correctly allocating VAT and clearing invoice, then simply post a bank payment to other debtors or a CIS tax account for the CIS amount.

    The Sales Receipt and the payment netted off should equal the amount received in bank.

    Hope this helps.

    Also agree the 20% is from labour only and prior to VAT charge.
  • JoBoJoBo Settling In Nicely Registered Posts: 16
    Ahh, so iv not gone mad then:001_smile:

    Thanks for all your advise, and groundy thats sounds very simple thanks.
Sign In or Register to comment.