For CIS sales I'd enter the invoice via customers as a sales invoice as follows:
DR: Debtors Control Account
CR: Sales in the P&L (Net Amount)
CR: VAT (Sales Tax Control Account) - if VAT registered
CR: CIS/PAYE account (if limited) /drawings or capital account (is unincorporated)
The materials would be entered as a purchase invoice via the supplier module (or a bank payment).
If you're talking about a purchase invoice for a CIS subcontractor, follow the above approach but post a purchase invoice, and post to labour, purchase tax control account and also the CIS/PAYE account.
I would not post as journals as the audit trail will not be as clear so ....
The subcontractor is a supplier and (especiallyif vat is invoivled) I would post as usual to a supplier account and code it to the relevant nominal codes disregarding the CIS for now. I would post both materials and labour to a subcontract account somewhere in the 6000's. But you could split the materials if you wish
Then post a credit note to the same supplier account for the CIS deduction value coded to a relevant balance sheet account (you could use the PAYE account but I would prefer to open a new one in the 2200's). Post the credit for the full amount of CIS and use tax code T9.
You will now have a supplier with the both an invoice and credit outstanding. When you pay the supplier allocate the balance to both invoice and credit (Allocate at the time of posting payment if you're using VAT cash accouting so the tax codes match.
You will alo have a DR entry against subcontract labour (&materials?) in the P&L and a CR balance in your balance sheet CIS account (or in the PAYE account) If you use a separate CIS account you can see the balane due to HMRC for CIS seperate from your payroll but can journal it accross if you wish at the end of the month (to match the CIS300 retturn).
The is basically what happens in Sage Line 50 CIS module.
Now ... of course there is much more to CIS than posting the invoices. You must be rgistered as a Contractor and all subcontractors need to be verified et et etc. I have assumed that all of this is in place.
Hope I have understood your predicament and that this helps
I didn't even know there was a CIS module in Sage, but I would rather not trust it....especially if it were in Sage Instant!!
However, I do exactly as Anne P descibes so could to know that the CIS module is basically 'automating' (if it is!) the process that I already use.
I also keep a spreadsheet record of all the CIS info which I pretty much export from the subbies creditor account in Sage.
Fom this, I calculate the CS payable (as it's only payable when the subbies are actuall paid) and also credte monthly statements for the subbies (which we are legally obligated to provide to them).
So the booking of invoices and credit notes is the simple part as Anne P suggests!!
Hi there, when I post the CIS in sage, I post the full supplier invoice to the supplier account, with correct tax codes etc.. and then post a bank receipt T9 to the PAYE/CIS nomial 2000ish in sage for the CIS tax. Pay off the supplier invoice in full and the difference between the supplier payment and bank receipt is what has been paid to supplier, and then when you pay the HMRC via a bank payment to the CIS/PAYE nominal account it is cleared back to zero. You just need to make sure that when you do bank receipt I always use the reference as the supplier so it can be matched against the supplier invoice. When you do cash accounting in sage will it allow a T1 and T9 to be matched off against each other via a supplier account, i,e invoice T1 and credit note T9, not sure as I have had problems with non matching tax codes. Any thoughts would be appreciated. Thanks Julie
I can see that the end result using your method would be acceptable, however, I would always try to post what has actually happened. I would personally not post a bank receipt as a bank receipt hasn't actually taken place thus you are creating two transactions in the bank account when only one has occurred. Just a personal view.
I think that providing you use the supplier payments routine and pick up both the credit and the invoice to create the supplier payment you should be ok with VAT cash accounting as it's usually only when you allocate payments on account (previously posted with a different tax code) when a problem arises. But I stand to be corrected if this is not the case.
Hi there, I have just tried your method in the sage practice data, which works great for standard accounting, i.e supplier invoice T1 and supplier credit T9, but sage will not allow the posting of two differing tax codes in the supplier account to the bank when it is cash accounting, i.e. comes up with a message saying mismatch of tax codes. Any thoughts, thanks Julie
Hi Julie - oops looks as though I've got this wrong and I do apologise - to be honest all my CIS clients use standard Vat - in most cases it would not be beneficial forthem to use cash accounting due to the zero rated nature of their supplies. So I wonder if the CIS module in Line 50 works ok with vat cash accounting ? Perhaps a discussion for another day. Your method would appear to be the best solution in such cases - Thank you for testing the postings.
Vicky - hope your ok with the postings now - whichever method you end up using.
Regarding the mismatch of tax codes. You can still post this way, invoice T1 and credit T9. When you want to allocate one against the other, go into File-Maintenance-Corrections and change the tax code on the credit to T1 (it won't affect the VAT), save it, then go back to the Bank-Supplier module and allocate them against each other, Save and then go back into Corrections and change the tax code back to T9.
