I have a question about CIS tax, my guy sometimes does work for other contractors and sends them an invoice -20% CIS which the other contractor pays for pays the CIS to the HMRC.
Do I put the invoice on ie labour -20%, but put this down as a nett amount or do I need to show the 20% tax on the invoice, and then the client pays him raise a credit note on Quickbooks to account for the 20% deduction.
Know how to do it the other way round IE purchases, ie if a subby works for him he then pays the CIS TAx on his behalf. I have got that entered in to QB OK.
LAstly, when paying CIS bill normally monthly, how do I account for it on Quickbooks ie is a CRedit from BANK and DEBIT CIS account. I have a CIS account set up s a liability account in the chat of accounts (or if you are sage it is ste up as a nominal code).
Hope that all makes sense, any help will be appreciated.
I don't use Quickbooks, but on Sage the process is as follows (assuming it would be similar for QB): Post Gross Sales Invoice: E.g. £1,000 to Debtors Account in B/S £1,000 to Sales Account in P/LThe CIS calculation would be as follows:
If net sales of £1000 CIS tax deducted = 20% x £1000 = £200
Post the Sales Receipt: E.g. £1000 minus CIS deduction of £200 = £800 £800 Debit Bank Account in B/S £800 Credit Debtors Account in B/S For the CIS amount of the invoice, i.e. £200, you need to credit the debtors account and debit an account set up for CIS tax. If you use QB you could set up a new bank account solely for the CIS tax. By doing the above you will clear down the gross debtor in the sales ledger, and have a debit balance sitting in an account to represent the CIS deducted to date. Hope this makes sense?
