accounting for cis tax and retention

System
System Posts: 100,537 🤖 Admin 🤖
edited June 9 in General accounting discussion
Hi I am doing book keeping and payroll for a small ltd company using Sage Line 50 and am confused with the way the previous accountants are accounting for CIS, The total invoice amount is posted to the suppliers account and then a credit is raised for the retention and CIS tax leaving the balance to be paid to the subby and any VAT but they are not posting the retention or Tax any help on correct postings????

Comments

  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:accounting for cis tax and retention

    Presumably when the retention is paid you'll need to raise an invoice for that amount (and then raise an appropriate credit note for CIS deducted from the retention)
    As for the CIS which account are they posting the credit note to? It should be posted to a separate CIS account or the payroll liabilities account and then when the deductions are paid to HMRC the cheque should be posted to the same account.

    Hope that helps a bit!
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:accounting for cis tax and retention

    yes that does
    thanks
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:accounting for cis tax and retention

    Does the CIS go to the same account as payroll deductions on sage?
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:accounting for cis tax and retention

    .
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:accounting for cis tax and retention

    Yes, the CIS deduction can go to the PAYE liability account, or you can open a separate nominal account for the CIS ddeductions. This is really a matter of preference - whichever way you find it easier to reconcile and idedntify what needs to be paid to HMRC.

    One further point about Sage and CIS. If you are using cash accounting for VAT the procedure is a bit more complex because the T codes on the credit and the invoice have to be the same so you can allocate them against each other in the supplier ledger. Let me know if you would like details.

    Sheelagh
  • System
    System Posts: 100,537 🤖 Admin 🤖
    Re:accounting for cis tax and retention

    hi thank you it is standard vat

Categories

Privacy Policy