CIS and VAT?

JoBo

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

T J

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.

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

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

Ahh, so iv not gone mad then:001_smile:

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