Accounting for CIS deductions

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ClareRoyle
ClareRoyle Registered Posts: 2
in General discussion
Hi All,
A bit of a tricky one (well I think so ) to start with!
I am bookkeeping for my husbands and brother in-laws new business. They are the only "employees" and the are both directors of the company
They are subcontracting for a company so have registered for CIS.
The invoice they have issued to the contractor has been paid with a deduction of 20%, how do I account for this?
Many Thanks!!

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  • Adele69
    Adele69 Registered Posts: 320
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    I'd be interested in knowing more about this area too.

    I work for a local authority, who act as a Contractor and make payments for stuff like Capital building project, Grounds maintenance, etc. Tax is deducted for those Subcontractors with tax type CIS NET (20%) or UNMATCHED (30%). These amounts are directly paid to HMRC. We are required to send a Statement of Payment and Deduction for the tax month, to those we have paid (and taxed).

    There is a separate tax control account in Oracle, though I'm not sure how this is reflected on the Subcontractor side as an expense or reduction of income?
  • laurared2301
    laurared2301 Registered Posts: 6
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    I work in a firm who have several construction industry clients on their books and I do their monthly CIS Returns for their subcontractors. One of them is also a subcontractor, so with his invoices to the contractor, I put the labour and materials through as normal with the VAT, and then deduct the 20% CIS to a "CIS deductions" account in liabilities, to then claim this back as a refund on his Self Assessment at the end of the year.

    You can also off-set the deductions if they are both a contractor AND subcontractor, but HMRC seem to have hidden the information on this pretty well on their website so it's a minefield to try and figure out!

    We've instead provided the Certificates from the Contractor in a letter and asked for them to be deducted. I did ask someone from HMRC if there is a way to do this online (like when you do the monthly CIS returns when they're the contractor) but they didn't seem to know! Some payroll software however do have this facility integrated in it so worth checking out with your provider.

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