IR 35

Neil8663

Neil8663
Good Morning all

I have avery in depth question concerning IR35.
I work for a recruitment agency. We have many PSC working through us with our end Clients.

The PSC sends us an Invoice + VAT this is entered onto the Accounts Payable ledger.

Jo of the PSC has been deemed by the end client that he is within IR35, as such we need to deduct Tax/NI as we are the Payee.

So if the PSC sends inv for £1000.00 + VAT (£1200.00)

We pay Jo on our payroll £1000.00, Tax is based on BR rate as he works for PSC.

So Jo is paid say £764.42 Net of TAX and NI

So the invoice value we would have to pay PSC is £1000 - 235.59 + 200(VAT)= £964.41

When posting payment how do we account for the £235.59 on the A/P ledger