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How do I ensure that a credit note to a CIS client actually includes the CIS element

 
3 REPLIES 3
QuickBooks Team

Re: How do I ensure that a credit note to a CIS client actually includes the CIS element

Hi steve80,

 

You should not use CIS on a credit note as CIS is calculated on a cash basis and is not claimed by HMRC until the invoice is marked as paid. 

 

Is the credit note you wish to raise in relation to an invoice you have already raised to a contractor?

Experienced Member

Re: How do I ensure that a credit note to a CIS client actually includes the CIS element

clarification required please

 

say invoice raised for £1000 labour only

 

contractor customer settles the invoice 

 

£800 paid to you as sub- contractor , and £200 to HMRC.

 

later your customer wants 100% of the invoice  value back.... poor workmanship.

 

You as Sub contractor raise credit note , £1000 to recognise refund .

 

Assume that as subcontractor you will not be doing future work for this customer.

 

The Contractor  will l want the credit note settled , by you

 

£1000 then paid to Contractor

 

the CIS scheme  does not allow for a credit of 20% tax.

 

effectively you the supplier of labour will have NIL £sales

 

but £200  sitting in the HMRC CIS account, to be offset against eventual tax liability

 

your cash flow is         £800 in     £200 in..... sitting with HMRC    and £1000 out 

 

you will have the pain of £200 now , relieved when £200 less tax paid   later 

 

unless customer will give you extended time to pay him £1000 !!!

 

freedie

 

 

 

 

 

 

Not applicable

Re: How do I ensure that a credit note to a CIS client actually includes the CIS element

Thanks

 

That £200 tax paid was what I was trying to avoid except it was a good deal more. Looks like I'll have to swallow the tax until HMRC deign to give us our rebate.

 

Regards

Steve