Hello!
We have a new customer who operates under CIS. They are a limited company on standard VAT accounting.
They were posting invoices to clients as normal plus a credit note to account for CIS Tax suffered to the nominal 2212 (they use Sage).
The problem is that if latter on they would have a customer refund (partial or full) they would do a credit note which would contain CIS tax in it. As the original credit note for CIS remained untouched a refund would again increase the CIS nominal.
What would be the best way to get rid of the extra CIS tax accumulated?
Thank you very much in advance.
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Replies (2)
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What a daft way of doing it or is this a contortion imposed by Sage?
I assume that the original CIS tax credit note was not sent to the client, but was used only for an internal posting to end up with 80% on the sales ledger and the 20% CIS tax as a debit on "nominal 2212" - which was presumably then transferred to the PAYE due account for set off against the PAYE liability in respect of employees and sub-contractors.
I do not know what you mean by "a credit note which would contain CIS tax in it" when giving a refund. Logically, you would reverse the procedure for raising invoices - the refund credit note would be for the gross amount and you would raise an internal sales invoice for the reduction of CIS tax suffered and post the credit to "nominal 2212". If the second stage of raising an internal invoice has not been implemented, I would suggest doing that to correct the balance on "nominal 2212".
Or have I completely misunderstood the question?
A credit note?
It's not a reduction is sales, is it ? It's money your customers send to a third party in settlement of your invoice.
You're always going to have problems with this because it's fundamentally misconceived.
Regard the CIS tax as some sort of savings account. One where the bank won't tell you how much is in the account and you have to guess.