I really needs some help with CIS I am getting myself confused had a break from work and CIS introduced while having time out.
So I work for a shop fitters who are hired as contractors and also use contractors.
So I understand how to deal with receiving sub contractors invoices (we use Xero) I know I need to verify and then set up at verified rate and then pay that 20% to HMRC monthly this seems clear to me.
However I need some clarification as to how I should bill out our sales invoices to contractors, currently I am not doing this side but want to understand how this should be done below is how I think it should work but struggling to find clarification on line
I have PO for customer for £10,000 the needs billing firstly I would check the costs we have received from subcontractors (currently set up a report that pulls this information by project)
So subcontractors costs are £2,000
So my invoice would read as below
Materials 1 £8,000
CIS Labour £2,000
Total £10,000
CIS Deduction £400.00
So customer will then pay us £9,600 and we will claim £400.00 from HMRC once payment received through Xero Payroll(suffered).
Is the above correct and also what happens if I receive additional labour invoice after already billing customer how would/should this be dealt with or does it not affect anything?
Any help would be greatly received even advice on a course I have done HMRC ones etc.
Thanks so much for your reply I still getting to grips with CIS, hoping to get business as Gross status so that it becomes simpler..
When raising a sales invoice I have down loaded guide from HMRC regarding VAT rules so check if customer is end user or contractor to establish if normal VAT rules apply or Domestic reverse charge and in the main we work for large contractors.
Profit is worked out on job by job basis I have written a report in Xero that shows CIS costs and end profit.
I have a question, I have looked at previous billing prior to me arriving here I have noticed on one occasion we have received additional CIS labour costs after billing out our customer, a further invoice of £1000.00 pounds how should this be dealt with from a billing out point say as in the below example ?
