Sub contractor - CIS reverse charge with materials

[Claireabell]

Please can someone help out on accounting side of things on inputting of the purchase for a sub contractor -

I have labour costs of 720.00
and materials 100.00
(he’s vat registered aswell with the vat reversal scheme)

How does this get inputted onto quickfile

Thanks

[FaradayKeynes]

Under company settings enable Enable CIS VAT Handling to On
This should help

Domestic Reverse Charge for CIS

From 1st March 2021, VAT registered businesses operating in the building and construction industry will need to change the way they collect and report VAT. The new changes will require businesses that are receiving a service from a CIS registered contractor to pay the VAT to HMRC, rather than paying the VAT to the supplier. These changes will apply only to UK VAT registered businesses or individuals supplying services under the Construction Industry Scheme (CIS). Enabling CIS VAT handling in…

[Claireabell]

Hi

Ive already done this and understand…Ive just got a sub contractor invoice for 984.00 including vat as he’s got to amend this his end as he’s done wrong!

So breakdown this for entering onto QuickFile

sub total would be ?

He’s supplied materials of £100.00

Equals £820.00

My question is how do I account for the £100.00 materials he’s supplied? or does it all get entered on the heading sub total - £820.00 with the CIS vat reversal.

Because normally when I calculate on my own excel spread sheet
my gross total would normally have been (exc vat) 720.00

Less cost of materials £100.00

amount liable to deduct is 620.00 with £124.00 to pay over to HMRC Tax as he’s under the CIS scheme.

AMOUNT TO PAY IS £596.00 (then normally you add the vat on top of this amount) but now you don’t cause of the VAT reversal.

[FaradayKeynes]

VAT is independent of CIS payable amount. All vat will be subject to reverse charge in general if qualifying activity is subject to vat. Above settings are for vat reverse charge only not CIS amounts.

Your sub contractor should zero rate vat on their invoice and mention vat reverse charge applies so that you can account for under your own bookkeeping system

[Claireabell]

Yep I understand this ------ so should i just enter the whole invoice 820.00 and he should not break down his invoice as labour and materials?

[FaradayKeynes]

It good idea to have separate category for material and labor for better analysis but if you like to use just one say “sub-contracting” thats fine as well. Other main thing is CIS handling

[Claireabell]

yep ive got a separate category when entering sub contractors and also a sub contractor sub account for netting off etc …

il just enter the whole invoice for 820.00 on QuickFile. which includes his materials.
then I have to deduct his 20% CIS deduction( NOT vat) off the £620.00. I then have to account for his 124.00 CIS tax (not vat).