Charging VAT when CIS registered.

mgrant
mgrant New MemberRegistered Posts: 7
Good afternoon All,

I am hoping somebody can clarify this for me. I have a client who is CIS registered and has just registered for VAT. He has queried how to invoice this. He has asked me if he charges VAT on the net then deduct CIS from the gross.ie

Labour £50.00 + Materials £20.00 = £70.00 + VAT @ 20% = £84.00 - CIS @ 20% (£16.80) = £67.20

or

Labour £50.00 + Materials £20.00 = £70.00 - CIS @ 20% (£10.00) = £60.00 + VAT @ 20% (£12.00) = £72.00

Which is the correct method??

I have in the past done the 2nd but have looked at this on HMRC website and it advises 1st method.

Advice Please

Comments

  • T.C.
    T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    NEITHER - try this!
    Do it in reverse:
    Total invoice £84.00
    Less VAT £14.00
    Sub-total £70.00
    less materials £20.00
    Balance £50.00 @ 20 % = £10 (CIS deduction)
    Amount to pay to subbie is £74

    Does that make sense?
  • Gem7321
    Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Neither.

    Labour £50 + Materials £20 = £70 + VAT @ 20% = £84 invoice total

    CIS deduction on labour only = £10

    Total due to subcontractor = £74
  • T.C.
    T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    Hi Gem7321 - looks like we answered that at the same time - glad to see we had the same response!!!! :001_smile:
  • Gem7321
    Gem7321 Experienced Mentor DevonMAAT, AAT Licensed Accountant Posts: 1,438
    Cross-posted! Very glad TC!
  • reader
    reader Experienced Mentor MAAT, AAT Licensed Accountant Posts: 1,042
    Very well explained- this forum is grrrrrrrrrrrrrrrreat!
  • RMD1
    RMD1 Registered Posts: 1
    Hi

    How do you claim the vat paid by us as a contractor for a vat registered subcontractor when doing quarter vat return?
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