CIS tax deducted

CIS tax deducted

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Hi folks,

Our client is a subcontractor for CIS purposes. He prepares VAT returns on the cash accounting basis. It's my first day back after paternity leave so maybe my mind isn't in top gear just yet, but can you clarify what the correct date of payment is for CIS tax deducted for VAT purposes?

For example, if my client invoices the contractor for £20,000 plus VAT and CIS tax of say £4,000 is deducted, when should VAT be paid on the money deducted? Is it the same date that the payment is received from the contractor, or later when my client reclaims all CIS deducted on his SA return?

Pretty sure it's the former but would like to confirm.

And as always, many thanks in advance for your help.

Replies (5)

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Stepurhan
By stepurhan
18th Apr 2016 17:27

Same date

He has "received" £24,000 (including VAT) on that date.

£20,000 was received as cash, £4,000 was "received" as tax treated as paid on his behalf on the same day. Any later receipt of actual cash from the CIS deducted (because it exceeds his total tax due) is not related to VAT at all.

 

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Kieran Phelan
By KPEM online
18th Apr 2016 18:16

thanks.....
Thanks Stepurhan. I kinda guessed that but my mind went blank!

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RLI
By lionofludesch
19th Apr 2016 14:56

Agree

VAT's not delayed until you get the CIS tax back.

That's why you get all the VAT in full.

If your client isn't getting the VAT in full, he needs a chat with the contractor.

If he is, why does he think he should be keeping it for months ?   It makes no sense.

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avatar
By rememberscarborough
19th Apr 2016 16:03

Just be aware that VAT and CIS tax deductions are two completely different transactions so have to be treated completely separately.

The VAT will have to be paid over at the end of the month following the end of the VAT quarter it was paid in.

The CIS tax deduction may be offset against PAYE/NI liabilities but it has nothing to do with VAT.

 

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Stepurhan
By stepurhan
19th Apr 2016 17:01

Unnecessary confusion

I think the CIS and VAT rates being identical sometimes confuse people. Because the amount they end up being paid happens to match the net figure on the invoice they think they aren't getting paid the VAT.

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