i have a client under CIS who is VAT registered. His client will keep a 5% rentention of his invoice for 12 months. Can someone tell me how to show this on an voice regarding the VAT?
Hi Georgie, yes retention is released later, and that's when you charge VAT. Although the VAT is calculated on the net after retention, not the post CIS net, meaning your VAT would be £95
Had there been no retention the VAT would have been on the full amount of £500 so I don't see how the VAT can be calculated on the amount after CIS deduction in your example. I don't know the rules on Retention and CIS deductions but I thought I'd make this observation on the VAT in your example.
Thinking about it logically I believe it should be :
First invoice
Labour / Job
500.00
Less 5% retention
25.00
Net
475.00
VAT @ 20%
95.00
570.00
CIS = 475.00 x 20%
95.00
Retention invoice
Labour / Job
25.00
VAT @ 20%
5.00
30.00
CIS = 25.00 x 20%
5.00
Unfortunately the borders in my spreadsheet have been removed when copying to the forum. It is complicated when VAT and CIS Rate (usually) is the same amount. It was more obvious in the examples when it was 17½% VAT.
EDIT : I was referring to the original post when I say it doesn't look right. Michelle's post agrees with my way of looking at it. I now know how Shaun feels when composing replies.
-- Edited by Peasie on Wednesday 26th of November 2014 10:32:39 AM
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