I know this has been covered elsewhere in the forum, but could not see anything for my exact circumstance.
I am a sub contractor working for a company who take 20% from me. I am a limited company who is registered for vat. I do not run paye.
Please can you give me some guidance how to complete my invoices and I beleive I would have to creat a new account also, but not sure what type and what to call it.
Alot of the other examples appear to be for sole traders, or if a company no mention of VAT.
As you dont have any PAYE liability to offset against your CIS deductions, you would invoice your contractor as normal with vat. They will take 20% off as CIS on your labour part net of vat and pay you balance
e.g your sample invoice as follows
Labour 100
Material 50
vat30
total due before CIS 180
CIS deductions (20)
Net of CIS due 160
You can create another bank account called CIS control a/c, once you book your invoice in full 180 in this case, you would get 160 in your main bank account, tag that against invoice then go to your invoice and log receipt of 20 using your CIS account. Your CIS account will show you how much refund your are due at any point of time
Thanks for the info. My contractor want to see the CIS on my invoice I send them.
Could I setup another account like a discount account and charge it to that.
Invoice he wants is something like this.
Labour per day 20%VAT £160
Milage@40p/mile 20%VAT £ 83.20
Cis deduction 0% VAT -£ 48.64 (minus)
sub total £194.56
VAT 20% £ 48.64
TOTAL £243.20
In my previous accounting package you charged the CIS portion to the Income Tax and NI Liability account. With QF it looks like you can only charge to a sales type account,
This is how it works in my existing accounts package, The contractor has checked and this is correct. CIS is taken off of milage allowance. Effectively it is 20% off with CIS and 20% back on with VAT. Of course you can’t charge VAT on the CIS portion so that is a 0% VAT. Problem is how can I reproduce this in QF and keep track of my CIS deductions. Please see the note I added to previous post, as I think I was editing while you were replying.
Mileage is for employees , companies or sub-contractors claiming mileage is practically taxable income for them. One can show CIS due calculations on face of invoice BUT if shown as deduction then you are reducing your turnover, it will show net debtors correctly but that is wrong total turnover figure. I remember working in another Ca firm they use to book ltd company turnover inclusive of net based on receipt from bank from contractors, this arrangement ignored the factor of CIS, i had to do revised calculations of sales and vat for last 4 years and they ended up paying about 25k in vat only
Thanks for your time on this. Trying to get my head around this. On my old system if you add a negative charge to a liability accout would that not keep the turnover correct, or am I barking up the wrong tree with that thought.
Note down current turnover for period on your old system then try create a simple dummy invoice on your old system with vat say labour 100 + vat. Save it, you should see turnover gone up by 100 and debtors by 120 and vat account by 20. Now go back to this dummy invoice and add another line of CIS deduction and make it -ive 20 with zero vat, you should notice that sales gone up by 80, vat 20 debtors 100. This shows debtors correct but turnover understated
I am getting the drift of what you are saying. This in fact means that the advise given by my other accounting package is misguided. Thank you for taking the time to explain that. I fully understand what you are meaning with this now.
I had sent a support request in to my current accounts package supplier to get some clarification on the issue, without running the test you suggested. After they responded I tried your test, and is does not take the CIS deduction off of the turnover figure. This was the response they gave. Could this be implemented in QF.
Bellow is the response from them.
On the CIS deduction line the Account should NOT be ‘Sales Income’ but instead it is either ‘Owners Drawings and Personal Use’ (if you are self-employed) or ‘Income Tax and NI Liability’ (if your business is a limited company). Therefore when calculating your Profit and Loss report the CIS deduction line will not be included in the ‘Sales Income’ figure.
On the VAT return Solar Accounts knows not to include lines which start with ‘CIS Deduction’ when calculating your Box 6 figure (‘total sales excluding VAT’).
Now the only change is in step 4, which I have rewritten below for your situation:
4. At the year end, simply journal the balance from ‘CIS Deductions [4011]’ to ‘P.A.Y.E.[2210]’, this is the control account, therefore any debit balance will indicate that a refund is due from HMRC to the company and any credit balance i.e. if the company in the future has a PAYE liability that exceeds the CIS deductions, will indicate a liability (payment) due to HMRC. You can create a new nominal code instead of ‘P.A.Y.E.[2210]’ if you prefer called ‘CIS Deductions’.
CIS REFUND:
At the end of the tax year, HM Revenue & Customs (HMRC) will repay to the company (or its nominee) any balance of the CIS deductions that the company was not able to offset during the year. To enable HMRC to do this, the company must have sent in its:
Final Full Payment Submission (FPS), where this is due,
Final EPS for the tax year, and
Request for repayment.
You can make a request in writing for this repayment by quoting your employers or accounts office reference and send it to:
HM Revenue & Customs
Employer Office
Room BP4009
Chillingham House
Benton Park View
Newcastle Upon Tyne
NE98 1ZZ