Bad Debt with CIS deductions

I have a client who has a bad debt invoice that includes CIS deductions - how is this accounted for?

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My client is a partnership, and so the CIS deductions are included as a tax credit against the partners share of the income and tax suffered on their respective personal tax returns. The total invoice was for £40k, CIS deductions £8k so net amount owed was £32k.

The client has gone into liquidation and it doesnt look like they will get any money. When I am preparing their accounts how do I account for the CIS. I assume if a bad debt claim is made, we cannot claim the CIS suffered also? So the bad debt claim will simultaneously lower profit and the CIS suffered?

 

Thanks

Replies (4)

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By Paul Crowley
17th Apr 2024 12:24

Reality is that the company did not deduct the CIS from a payment, because it never made a payment.

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Replying to Paul Crowley:
RLI
By lionofludesch
17th Apr 2024 12:57

Paul Crowley wrote:

Reality is that the company did not deduct the CIS from a payment, because it never made a payment.

That's how I see it.

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DougScott
By Dougscott
17th Apr 2024 12:32

The bad debt is £40k, assuming you never received a CIS certificate from the customer. And assuming you showed the whole £40K in turnover as you should have done.

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By Lucy N
17th Apr 2024 14:48

CIS should only be reported when it is actually suffered. If the customer has not paid the relevant invoice, the CIS has not been deducted from it and will not have been reported. It shouldn't be included on your client's return.

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