I have a client who is a tiler and receives payments from a building contractor. The payments he receives already have 20% tax taken off them. How do I account for the tax which I presume the contractor will pay on behalf of my client?
Do you mean when you do the tax return? There's a box that you put the total deductions in and then they are taken into account when the calculation is done.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Yes the contractor will pay this tax to HMRC. I assume these payments will have invoices to match them against? In which case the 20% tax will remain outstanding on the invoice when you record the receipt. You need to credit this amount from the debtor's ledger and debit it to a current asset account for CIS tax suffered. (If you are using Sage this will be in the 11xx range).
Hope this makes sense.
Pauline
And if you're doing your tax return, you do what Jenny said! Sorry Jenny...we posted at exactly the same time!
-- Edited by Stardoe on Wednesday 26th of October 2011 01:03:09 PM
Just a thought.....but assuming the tradesman does nothing else in the year but CIS work and ignoring any other tax reliefs and also NIC......does this mean that they can pretty much expect a £7.5k tax rebate for the year????
Sorry Jenny...we posted at exactly the same time!
