CIS and VAT?

JoBo Registered Posts: 16 New contributor 🐸
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.



  • T J
    T J Registered Posts: 26 Regular contributor ⭐

    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

  • T.C.
    T.C. Registered, Tutor Posts: 1,448 Beyond epic contributor 🧙‍♂️
    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.
  • groundy
    groundy Registered Posts: 495 Dedicated contributor 🦉
    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.
  • JoBo
    JoBo Registered Posts: 16 New contributor 🐸
    Ahh, so iv not gone mad then:001_smile:

    Thanks for all your advise, and groundy thats sounds very simple thanks.
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