I have a client who I do the bookkeeping for his Ltd company. One of his customers has deducted 30% from one of my clients invoice's as a CIS deduction because he hasn't been verified yet by HMRC. I'm using VT transaction, where would I post the tax to? Should I set up a new account for CIS paid. At year end I hand over the accounts to a chartered accountant for them to draft the accounts and prepare the corporation tax return, so I want to get this right.
sorry, dont have any CIS bods myself but if you go to the help facility in VT and type in CIS that will give you the construction industry subcontractor payments help page which you may (or may not) find helpful.
sorry that I'm of no more direct help on this one,
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I would post it to a separate bank or Debtor account to keep track of the CIS which is due.
In sage for example, to clear the debtors I post the amount actually received from the bank as a Sales Receipt - this leaves the CIS amount in the Sales ledger - which I then post as a Sales receipt against the CIS bank account..
Shamus - can you do similar in VT??
Hope that helps
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As a Ltd Co are they not then entitled to reduce the PAYE/NICs they pay each month/quarter by the amount of CIS tax deducted so it would go to that account? Or does he not have enough PAYE/NI to cover that?
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I look after CIS for my self employed bods who file self assessment, I set up an account in drawings for CIS so I know exactly how much needs to entered in the CIS section of the SA. How does CIS work when filing for corporation tax? Is there a section on the return for CIS?
Maybe I should set up another account in drawings for CIS?
Defo keep the CIS tax deducted by your clients customers in a separate nominal account as an asset in the balance sheet - this should never hit the P&L
In Sage it is easier as a 'bank account' so you can clear the sales ledger with the CIS shortfall. I cant say what you do in VT - how do you remove the balance in the sales ledger?
Peasie is right in that you can use any CIS suffered to offset any PAYE liability, so you would transfer the CIS to the PAYE account each month.
There is no section on the CT return for CIS suffered as it is an asset of the company.
It used to get refunded at at the end of the year on P60 submission, in some cases I have seen it offset against VAT or CT owed, but this has to be done by HMRC and I don't think normal practice.
Hope that helps
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Sorry Peasie and Ruth I didn't see your replies yesterday. At the moment he is just dealing with CIS, he has no employees so no PAYE to offset it against.
I think what i'll do is set up a 'CIS Suffered' in my assets on the balance sheet, hopefully this way I can post the balances that are left over in the sales ledger to there. At least that way we can see it's seperate, I just don't know how he will get the CIS back if he's paying corporation tax. Do you think that it's a good idea to call his accountant? I don't want to sound incompetent as this is my first time working alongside a fully qualified accountant.
