CIS tax deducted from debtors in next tax year

CIS tax deducted from debtors in next tax year

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On my last tax return and subcontractor set of accounts.

Have approximately £17K debtors at year end (05/04/07) where work has been invoiced but monies not received until 2007/08 whereupon contractors have deducted 20% tax.

At present, I have only included CIS tax deducted during 2006/07 tax year in tax return but as result of above, I seem to be faced with breaking news at 11th hour that client has tax liability due today.

Could anyone confirm that this is correct, tough luck etc etc?!
Gemma

Replies (14)

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By cmclaren1978
07th Feb 2008 09:34

Same situation here
Hi Gemma

I came across the same situation last month, a client who got a refund of £1500 last year suddenly had £4,200 tax to pay in January this year because of a £15k debtor. The client wasn't too impressed - but unfortunately there isn't a lot we can do. It's one of those little annoying loopholes in the tax system.

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By User deleted
07th Feb 2008 09:11

Wimmins' issues!
Eileen, if your problem was with anon, where did anon say in his posts that he was a man? And what is sexist about about eg "nice girl", unless you start from a presumption of sexism?

I stand by my post.

You should lighten up, maybe read Viz and, in the words of the Sopranos - stop breaking my balls.

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By User deleted
04th Feb 2008 22:52

Issues!
My deep-rooted issues are with people who cannot read posts properly and then, like Anon, issue patronising, sexist and a little menacing responses. Perhaps you should concentrate more on that than on my perfectly legitimate comments.

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By User deleted
04th Feb 2008 17:13

Hmmm
I'm sensing that Eileen might have some deep-rooted issues with men.........

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By User deleted
01st Feb 2008 16:42

Thanks Eileen
Was starting to feel like I was standing trial for a moment. Was all calm again and then another late show this morning with books and records grrrrrrrrrrr!

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By User deleted
31st Jan 2008 23:33

You are right on all counts!
Can now join the smug people who have finished, although not much time left to gloat now is there!

Suppose I'd better spend the next few days getting some bills out for all this late night working zzzzzzzzzzzzzzzzzzzzzzzzzz

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By AnonymousUser
31st Jan 2008 23:09

OK, Gemma, as you seem like a nice girl
I will let you off this time.
To avoid a scenario like this again, just use a different year end, 31 December springs to mind.

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By skylarking
01st Feb 2008 12:39

Steady Eileen .. . . !
I felt that from here! Your comment has registered a 5 on the sexist richter scale.
Gemma, I understood. Like you I would like to stamp my foot and yell, 'It's not fair'. Sadly, the rules will always disadvantage someone.

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By User deleted
01st Feb 2008 10:13

What was unclear?
I think your posting was very clear Gemma. I understood it even if some men didn't! I think it does work both ways though. If your year end is say December your income is to December but I think you can offset all tax deducted to the end of the tax year.
Perhaps someone who has clients such as that can confirm or deny!

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By User deleted
31st Jan 2008 22:47

Income HAS been included!!
My client has invoiced in 2006/07 and that income HAS been included in debtors.

It was just that he was not paid until 2007/08 tax year and CIS tax deducted therefrom accordingly.

I am obviously not explaining my point re the timing of paying tax on income arising from gross debtor and then having CIS tax deducted upon receipt. All of which happens before the credit for CIS tax deducted is finally received in the 2007/08 tax return.

Client has accepted his tax liability without issue in any case.

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By AnonymousUser
31st Jan 2008 22:40

be very careful
be warned you must include that income on his tax return, else you will be guilty of fraud and tax evasion by association. you could face 5 years in prison.
you have been warned.

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By kailashk
31st Jan 2008 22:16

Debtors
CIS tax suffered during the year should be included on a tax year basis whereas sales should include entire amounts invoiced till the accounting year end date although they may still be under debtors. The cis tax and net receivable from the contractor can be kept under separate debtors headings for clarity. Any tax suffered on 07/08 invoices will be offset in next years tax return only.

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By User deleted
31st Jan 2008 22:10

Income has been included
Just seems bit unfortunate that having to pay tax on that income now whereas the CIS tax deduction relating to that income has already been suffered in April and May 2007.

Effectively suffering the tax twice before he gets a credit in 07/08 tax return - at least thats how it seems to me!

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By AnonymousUser
31st Jan 2008 21:23

should be included in accounts
if the work has been done and invoiced then it should be included in accounts. there is no dispensation for subcontractors ie the fact he is a subcontractor is irrelevant.
if the accounts have been prepared on a consistent basis, then there would have been debtors b/f also.

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