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• # 100975
• Tue 12 Aug 2014 03:08 PM

Hello all,

I've just taken on my first CIS client.  He both subcontracts people to do work and he him self is sub contracted to do work.  My question are how to handle these in the accounts.

When paying a subcontractor I would do the following

Dr Subcontracting Cost £100 (Expense)
Cr Bank £80 (Asset)
Cr CIS Tax £20 (Liability)

Now my client will pay the CIS Tax to HMRC during the normal PAYE payments (he has 2 employees too)

When he him self is the subcontractor he would raise an invoice

Dr Debtors £100 (Asset)
Cr Income - Subcontracting £100 (Income)

The subcontracting company would then pay the invoice minus CIS

Cr Debtors £100 (Asset)
Dr Bank £80 (Asset)
But where do I put the £20 CIS payment? What sort of account is it (Expense/Liability)?

Any help would be gratefully received as I'm going around in circles, and have probably over complicated it in my head by now :-)

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• # 100978
• Tue 12 Aug 2014 04:15 PM

Hello TDS,

The company I work for is also in the same situation of being both a contractor and a Sub-contractor. We use Sage Line 50 and both CIS deducted an CIS suffered go through the PAYE control account.

The essence of your situation is that the £20 you are talking about is offset against your overall liability to HMRC. For example say you owe HMRC £500 this month from your normal payroll and using your figures below you have deducted £20 from your sub-contractor, this would increase your liability to HMRC to £520. Yet you have suffered CIS deductions of £20 as a sub-contractor yourself and so this needs to be offset agsint this £520, bringing your liability back to £500.

Don't forget that all of your CIS figures suffered and deducted need to be reported to HMRC online.

Hope this helps.

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• # 101001
• Wed 13 Aug 2014 08:52 PM

The method described by Manbrick is correct IF your clients' business is a Limited Company. If he is a sole trader, you can't offset CIS suffered against PAYE.

If your client is a sole trader - the other £20 withheld by his debtor would be directed to a current asset account called CIS Suffered.

When his self assessment is calculated, the amount in this account for the tax period concerned can be offset as tax already paid.

Hope that helps

Carol

• Carol Saunders
  Lady of Ledger Book Keeping
  Telford, Shropshire

  
  

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• # 101011
• Thu 14 Aug 2014 08:22 AM

Thank you manbrick and Carol,

That has made it clear now. I was stuck in the middle. Part of me wanted to
set up another account, CIS Suffered, and the other just wanted to put it
in with the PAYE due.

This current client is a limited company so I will put it with the PAYE
due.

Thanks
Torben
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