CIS asset being transferred to corporation tax

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Hi,

Just wondering if anyone can give me some advice please.

I currently use Xero for accounting and I currently have a CIS asset sitting on the balance sheet.
However, this CIS asset is being used against 22/23 corporation tax liability.
What is the double entry I need to enter here?

I went to CR the CIS asset & DR the provision tax provision, but this wont change the tax expense on the P & L.

Any help would be appreciated!

Replies (10)

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By Sandnickel
27th May 2024 15:30

Wait until it has actually been offset by HMRC then CR CIS and DR CT liability on your balance sheet.

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Replying to Sandnickel:
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By CiaraHickman93
27th May 2024 17:17

Hi,

Thanks for the response.

I did think that’s what I should do. But then my corporation tax expense will still state the full amount without the minus CIS offset? How do I overcome this?

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Replying to CiaraHickman93:
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By Sandnickel
27th May 2024 17:54

As it should. The p&l Dr is the expense, the bs cr is the liability. When you pay the CT it clears the liability, the CIS offset is a payment in kind against the liability.

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Replying to Sandnickel:
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By CiaraHickman93
27th May 2024 18:09

Perfect!

Thanks for the advice. Appreciate it!

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Replying to Sandnickel:
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By CiaraHickman93
27th May 2024 17:22

But then also what happens to next years corp tax liability expense journal as the journal amounts won’t match (to make the corporation tax liability and corporation tax expense account balance again) if that makes sense! Haha

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Replying to CiaraHickman93:
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By Leywood
27th May 2024 17:35

Stop and think about it for a minute and consider the different between the P & L and the balance sheet.

In fact, hand write the T accounts, all should become clear.

Thanks (4)
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By Matrix
27th May 2024 15:34

The tax charge doesn’t change, just how it is settled. The amount owed is just less now due to your adjustment, the changes are purely balance sheet as you have done.

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Replying to Matrix:
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By CiaraHickman93
27th May 2024 17:19

Hi,

Thanks for your response

So I doesn’t matter what the corporation tax expense says? Because it will still state the full amount with the offset? It’s just a balance sheet adjustment?

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By Paul Crowley
27th May 2024 20:37

If you do nothing, then you will end up with a cis asset and an equal unaid CT liability.
Just set them against each other.

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Replying to Paul Crowley:
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By CiaraHickman93
28th May 2024 06:33

Makes sense. Thank you!

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