I have a quick question, I have a year of remittance advices for my client who is a builder and he had work subcontracted out to him the figures are as follows:
£867.94 gross - 20% = 694.35 which was paid into his account by bacs then there is an amount for TAX for £173.59, I have done my maths and I can see where they get this amount from, I have done 17.5% on £867.94 and it comes to £151.88, can any please point me in the right direction?
I even contacted the HMRC who were not very helpful, he did not have any clue either as to where the figure of £173.59 has come from.
867.94 x 20% = 173.588 or 173.59 Those 20% deducted from the gross amount payable to your customer represent the CIS deduction , and yes it comes under tax but it has nothing to do with the VAT. Actually the main contractor has stopped 20% from your client and has paid those to HMRC. It comes under tax as when the builder fills in his tax return the total amount of CIS deductions during the year will be considered as tax paid. I hope it helps!
You say £867.94 gross - do make sure this doesn't include VAT if they've taken off the 20% - the 20% CIS is not to be off the gross amount with VAT, or off any materials, only the actual labour component.
Thanks for both of your replies, I have sorted it out, thanks.
I do have one more question regarding the CIS pay receipts I have.
How do they go onto SAGE? I have entered all other information regarding this client as he is new to me so I had to enter all the info onto my system, so all the bank statement have been sorted, cheque payment tally up with bills etc, petty cash reciepts are done, it is just a years worth of Remittance Advices showing his wages and deductions and another pile of Contruction Industry Scheme Statements for the year (how much CIS tax he has been charged).
Please can someone help me clear this up as the client is wondering why I am taking so long just entering data.
Please do not, repeat not, use the term 'wages' in this respect ... always use the term 'Subcontractor Receipts' as the Revenue might assume the Subcontractor is acting as a Wage Earner and not a Subcontractor.
In addition, make sure your Subcontractor Client uses the same terminology.
