IR35 - How do I show shortfall payments for an invoice?

Our consultant is currently working for a local council through a recruitment agency. Up until now we have invoiced the agency who in turn add their bit and invoice the council. From next week the IR35 rules come into force so when I invoice the agency, their payment will come back minus tax & NI.
How do I show this shortfall in the invoiced figures and show the tax & NI in the accounts?

I hope that makes sense.

Thanks in advance


Council will be applying IR35 to recruitment agency not your company. You as company is providing service to recruitment company which is not a public body engagement directly as such, is that right? if yes then either you are under IR35 or not with recruitment agency is different situation.

If you are under IR35 globally you would record net amount to you as your revenue and at year end while doing CT would work out deemed income for income under IR35 only excluding not non IR35 turnover, I did a short article recently for more details on What is IR35?

Hope that helps