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Construction Industry Scheme help

  • Affiliate
  • 13 posts
  • # 116731

Hi everyone, I'm hoping someone might be able to shed some light. I'm trying to wrap my head around deductions at 20% for a VAT registered versus not VAT registered sub-contractor. Can anyone help?

  • Affiliate
  • 13 posts
  • # 116732

LollyBets said:

Hi everyone, I'm hoping someone might be able to shed some light. I'm trying to wrap my head around deductions at 20% for a VAT registered versus not VAT registered sub-contractor. Can anyone help?


 

  • Member PM.Dip
  • Practice Licence
  • 29 posts
  • # 116733

Hi LollyBets

The only difference in what you deduct for CIS is in whether or not the subcontractor is verified by HMRC or not.

If they are verified then you would deduxt 20% of the total labour charge from the total (gross) invoice value and pay this to HMRC. If they are not verified then you would deduct 30%.

It makes no difference whether they are VAT registered or not as you are purely dealing with the income tax side of things as opposed to VAT.

If they are not VAT registerd then they should not be charging you VAT but would include any VAT they have paid in their amounts to you for any materials, hire of equipment etc that they are charging you for.

Hope this helps.

Kind regards

Gordon

  • Affiliate
  • 13 posts
  • # 116735

Gordon said:

Hi LollyBets

The only difference in what you deduct for CIS is in whether or not the subcontractor is verified by HMRC or not.

If they are verified then you would deduxt 20% of the total labour charge from the total (gross) invoice value and pay this to HMRC. If they are not verified then you would deduct 30%.

It makes no difference whether they are VAT registered or not as you are purely dealing with the income tax side of things as opposed to VAT.

If they are not VAT registerd then they should not be charging you VAT but would include any VAT they have paid in their amounts to you for any materials, hire of equipment etc that they are charging you for.

Hope this helps.

Kind regards

Gordon


 Thanks Gordon, that helps. There are so many things with this course that I'm struggling to wrap my head around, heaven knows how I'll manage with the higher levels!

  • Member PM.Dip
  • Practice Licence
  • 29 posts
  • # 116736

Hi LollyBets

No problem. If you have got this far then you have a good background knowledge and I am sure that you will succeed.

Just remember that you can do it.

Also note that, if you havent already worked it out, the HMRC online calculators for PAYE and NIC (Directors and non-Directors) will now only work for tax year 2018-19 and not previous years so you will need to calculate these manually for the mocks and final exam - made that mistake on the first mock so learned from that.

Good luck with your studies.

I am taking the PM Dip exam tomorrow then moving onto the Self Assessment side of things.

Kind regards

Gordon

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