Accounting for CIS deductions

[carlchip]

Hi All,
Apologies in advance for repeating anything that has been said before, but I am still having some problems understanding the process behind accounting for CIS deductions.

in short, I am operating as a VAT registered company and have recently done some work for a contractor who has deducted 20% of my labour only invoice for CIS.
I do not use Quickbooks or Sage but a free issue accounting package given to me by my bank when I started up - called Do$h. This probably doesn't help!

Anyway what I am trying to do is as follows (numbers have been rounded for ease) -

My original invoice to the contractor was for £10K + VAT;
The payment from the contractor is £8K;
I have received the payment notice from the contractor detailing a tax payment of £2K;

In Do$h I cannot reconcile the amounts as there is a £2K difference and I do not understand how to overcome this.

also, do I need to enter a payment to HMRC for CIS payment?

sorry to harp on, but this really has got me stumped!

Many thanks for your help,

Carl.:|

 

[MyAccountantOnline]

Hi Carl

Using DOSH is probably not helping to be honest. It was a good little package in its day but its a bit cumbersome now and you'll find lots better. Things have moved on a bit since DOSH was brought out.

If you do want to persist with DOSH you could set up an expense heading for CIS tax and post your CIS to that heading but my advice would be to get an accounting package like Solar http://www.solaraccounts.co.uk/
This will deal with CIS for you.

 

[Tom McClelland]

Are you a sole trader or a limited company?

 

[carlchip]

Hi Tom,
I am a limited company..

 

[MyAccountantOnline]

Carl I assumed you were operating via a limited company hence my suggestion to have a seperate account in DOSH for the CIS (it doesnt deal with it properly but it keeps it seperate and should help your accountant do the year end accounts for you) - do you understand how CIS is paid to HMRC?

 

[David Griffiths]

As dosh is only a cashbook program, I'd suggest that you record the full amount due as a receipt (£10k + VAT), and then show the amount deducted for CIS as a payment of PAYE, which is where it will be set off as a limited company.

When you reconcile the net banking, tick both amounts, and things will come back properly

 

[Tom McClelland]

Hi Tom,
I am a limited company..

Then you should be registered as an employer if you're doing CIS work. The £2k is an advance payment of your monthly/quarterly PAYE/NI payment to HMRC. So enter it as a payment against that account.