HELP VAT problem!

eddy2309 Registered Posts: 16 New contributor 🐸
I recently posted a question that I have had no replies to, and I cannot find the answer anywhere! Basically I have a client who exceeded VAT threshold and now HMRC want him to account for VAT from 01.08.14. So if he invoiced for 2,300 materials and 1,300 labour = 3,600 to which they deducted 20% tax of 260 = net payment of 3,340 paid. What would be the Gross Payment? would I use the original Net payment as the Gross?
Not sure how to explain it, I just hope someone out there understands and can help! Please!


  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    Hopefully the client can agree to re-charge the original customer(s) as much of the VAT as you can to minimise the burden.

    If the original amount was £3600 and CIS was deducted of £260 giving £3340 net payable.

    VAT should have been charged on the whole invoice amount i.e. £3600 + VAT of £720 is £4320.

    CIS is still only deducted on the net amount of labout so still £260

    Net payable now £4320 - £260 = £4060.

    The difference therefore being the £720 VAT.

  • eddy2309
    eddy2309 Registered Posts: 16 New contributor 🐸
    Thank you very much for your reply. He can't re invoice any clients so must bear the vat burden. It's the re arranging of figures that's confusing me. Is it correct then to use the amount paid plus add on cis deducted as the gross amount? Then get the net amount and work out the vat on that? As we can't change amount paid I can't see how else to do it.
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