Hi,
Am an ICB student and hoping that a Xero guru can kindly advise me on using Xero for a CIS subcontractor (VAT registered) particularly on Invoice Account codes & Tax rates.
Have a basic understanding of CIS i.e. if work falls under CIS then deductions required on labour, overnight expenses & mileage but no deductions on materials and that these deductions are sent by contractor into HMRC for holding against the subcontractors tax/NI.
Also know that invoice must state rate of VAT & clearly state DRC for a non end user, etc.
Issue I have is transposing this correctly into Xero (as a newbie) & despite asking Xero support, just get pointed to help files which I have already studied to no avail.
For ease, have set up item codes for main items - labour, overnight expenses, mileage & materials.
On invoice have applied all of these accordingly (except materials) to account code 210 CIS Labour Income with a tax rate of DRC@20% (VAT on income) so correct deduction made - is this correct?
Then have got stuck on materials - I know it can't go under same as no deduction required so would I set this to code 310 Cost of goods sold but then saw 310 or maybe 200 - Sales ( although thinking that may need to amend account code name to a 200 Sales - CIS & also have a 201 Sales - non CIS - for when work is for a private householder so doesn't come under CIS and then will be easy to report on)?
Also would the tax rate still be DRC@20% (VAT on Income) for materials as that is what is old invoices are showing he has done in the past (said he was told to by contractors).
They have been reimbursing him the full materials cost & then he puts through VAT amount on VAT return - is that correct as seems to me he is getting more than paid back - might be my frazzled logic at this stage?
Hoping that made some sense and help and advice very gratefully accepted.
Thank you very much.
Carrie
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