Morning everyone, my poor brain is hurts. Client has paid a subbie the wrong amount and I know it is probably easy but I am struggling to figure out how much to put on the CIS return. Subbie should have had 20% deduction but client forgot and has paid them the whole amount. Have tried to get the money back from the subbie but no joy yet (don't think they will be used again anytime soon)
Figs:
Lab £1515
VAT £303
Total £1818
CIS deductions (20% of £1515) £303
£1212 + £303 = £1515 to pay
He has however paid him £1818 total.
I know the VAT is not included for CIS but I am unsure what to put on the return. I have read the CIS guide but to be honest I am none the wiser
Personally I would enter 1515 and 0 tax, and then inform HMRC that a genuine mistake has been made. It is up to HMRC to decide whether a penalty should be imposed but 4.45 on page 39 of the guide allows for a genuine mistake.
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
As long as he does his tax return, there shouldn't be an issue, as tax is calculated on his profits and then any CIS is deducted as a payment on account towards that tax.. so he will just suffer it when he files his return.
