Hi, we are a contractor currently not VAT registered. We have an invoice from a sub-contractor who is VAT registered and need to make CIS deduction. Not sure how to show this in QB, we have CIS etc set up but our subcontractors are not normally VAT registered.
Ok so invoice is for £500 including VAT, so the net amount is £416.67. This is all labour so we need to deduct 20% from the £416.67 giving us £333.34. Now we need to add the VAT back on as this is not CIS deductible so the VAT portion of the invoice was £83.33. Add this to the £333.34 total payable to SC is £416.67. Bingo, CIS deducted, he deals with his VAT at his end.
So on my bill from subcontractor, Line 1 has Subcontractor CIS cost standard (20%) with a value of £416.67 from which QB auto deducts the 20% CIS. How do we now show the £83.33 part of the invoice or rather which account is this shown as on line 2.
This is months old so you've either figured it out by now - or gone mad in process
You not being VAT registered complicates things slightly & CIS without VAT is probably a use-case that QB doesn't handle very well.
Your manual calculation is spot on. You withhold 20% of the net invoice value & pay the customer the 80% plus all the VAT but QB will not be able to do that on one line (because it's expecting you to be VAT registered & so the VAT would be reclaimable).
As a workaround, you will have to enter this on two lines on the bill in QB.
Line 1 : Subcontractor CIS cost standard (20%) with a value of £416.67
Line 2 : Subcontractor VAT with a value of £83.33
The VAT (to you) is an expense so you will need to set up a new Category/Account Subcontractor VAT - or you may be able to use Subcontractor Gross or Materials as long as this won't confuse your systems (either would work from the point of nil deduction).
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