Not got a second spare to check this at the mo, will look at it later unless someone beats me to it.

-- Edited by Cheshire on Friday 18th of August 2017 07:03:48 PM

Thanks John ... sorry yes re 1st eg should be 60 cis tax so customer pays £390 ..... head was alittle frazzled by the 2nd eg i didnt undersstand

In the 2nd example it is definately shown as

Gross Taxable 1669.84

Tax 333.96

VAT 25.55

Total Payments 1669.84

Total Deductions 359.51  (The total deductions 333.96 and 25.55 come to the total dedcutions figure 359.51)

Net Payable 1361.43

But the total Payments less dedcutions equals 1310.33 which is 51.10 difference - which happens to be 2 lots of 25.55??


The gross taxable figure was given as a calculation of 5 figures which do total 1669.84

1146.79
208.32
186.96
42.97
84.80


25.55 vat would mean 127.75/25.55

So does that mean the 42.97 and 84.80 figures are involved in the 25.55 vat as they total 127.77 ????

Am i getting close or am i going way off track ?????

-- Edited by Gail72 on Friday 18th of August 2017 01:06:36 PM

-- Edited by Gail72 on Friday 18th of August 2017 01:37:00 PM

Looks like you are using the vat fractoin in the first £50 instead of £60, so its about knowing what percentages/fraction type calculations to do.

Can I suggest you post the actual question as a screen shot as I often see that there is something missing when its just typed out. You can redact any private info.

AlbaBeanCounter wrote:

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Leger wrote:

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Hi Gail

I'm puzzled as to why only two of the amounts are subject to VAT?  Is there anything in the Accountant's question to clarify it?

 

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 Zero rated work and standard rated no doubt.

New build house exempt

Garden wall standard rated.

 

Edited to change zero rated to exempt

-- Edited by AlbaBeanCounter on Friday 18th of August 2017 07:59:13 PM

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Ahhhh Tomo - which is it? Zero or exempt?

Agree that there can be a mix of VAT rates, even 5%.

Cheshire wrote:

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AlbaBeanCounter wrote:

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Leger wrote:

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Hi Gail

I'm puzzled as to why only two of the amounts are subject to VAT?  Is there anything in the Accountant's question to clarify it?

 

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 Zero rated work and standard rated no doubt.

New build house exempt

Garden wall standard rated.

 

Edited to change zero rated to exempt

-- Edited by AlbaBeanCounter on Friday 18th of August 2017 07:59:13 PM

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Ahhhh Tomo - which is it? Zero or exempt?

Agree that there can be a mix of VAT rates, even 5%.

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 I was right first time... New builds are zero rated. Sure materials for structure would be exempt... Will have to have a wee refresher.... VAT so exciting

Advanced Editor

Attach files

find the file that you want to attach and click open

once its been attached you can insert it into the body of the message simply by hitting Insert next to the image

 

HTH,

Shaun.

Shamus wrote:

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Advanced Editor

Attach files

find the file that you want to attach and click open

once its been attached you can insert it into the body of the message simply by hitting Insert next to the image

 

HTH,

Shaun.

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Hi Gail

Are you accessing the site from a PC?   

Just to add to Shaun's note, advanced editor is one of the options at the bottom of the 'quick answer' reply option.   You cannot get to it when doing a 'quote' type response as far as Im aware and you probably will not see the option if you are on a mobile phone.

Use 'Paint' software to redact any info, save as a picture and job sorted ready for upload.

-- Edited by Cheshire on Monday 21st of August 2017 06:20:27 AM

You are confusing me and I work for a construction company and deal with CIS every day.

Are you sure the accountant knows what he is doing? (Some accountants are rubbish with CIS)

Is the gross taxable figure the amount the subcontractor was actually paid and so you are working backwards? Is that amount including VAT? IS their CIS status a standard 20%? IS the entire figure labour only or are there any materials? Why are you working backwards?

Firstly whoever made out that payslip needs to learn the rules of rounding (1669.84 times 20% CIS deduction equals £333.968 which should be rounded up to £333.97

And that VAT figure surely must be wrong.

You don't deduct VAT from someone you pay, you add it on and they pay it over to HMRC.

pictures wrote:

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If I received a bill for labour from a subbie I'd itemise it like this:

Total labour figure £1,669.84

Plus 20% VAT £333.97

Minus 20% CIS deduction £333.97

Total payable to subbie £1,335.87

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Totally agree with what Julie says about a subbie payment

Why is the VAT figure £25.55 it can only be from the figures of £42.97 and £84.80 plus 20% VAT but if this is the case why has it been deducted and not added on and why only charged on these figures and not the rest.

Might be good to look at the Invoice as I always thought that Carpet fitting is excluded from CIS 

 

Artois wrote:

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Might be good to look at the Invoice as I always thought that Carpet fitting is excluded from CIS 

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 I stand corrected on this, I just looked into it in more detail and it seems that although carpet fitting is excluded from CIS because it appears on the same Invoice and I would assume part of the same job it does in fact become liable to a deduction under CIS 

But you are doing it backwards. Its the subbies job to raise the invoice, not the contractors. The subbie charges the VAT and the contractor deducts the CIS. Why is the accountant giving you this test when its irrelevant.

the subbie should send an invoice reading something like this

For labour provided as detailed:

Plot Vinyl 1146.79
Plot Screed 208.32
Plot Carpet 186.96
Uplift & Dispose 42.97
Extras 84.80


Nett Total £1,669.84

VAT at 20% £333.97

Total Payable £2,003.80

The contractor should then verify the contractor and deduct 20% on the net figure. The statement of deductions should read something like this:


Total gross amount (less VAT) £1,669.84

Less Materials £0.00

Amount liable for deductions £1,669.84

Total tax deducted £333.97


The contractor then pays the subcontractor £1,669.84 which is broken down as detailed in my post above.

This is of course assuming all items are Vatable and subject to CIS but the onus would be on the subbie to itemise VAT rates and non deductible items (for example of an invoice was for commissioning only, no installation)

Hi Gail

I don't see how you can raise an Invoice if the only information you have is contained on the payslip you posted.

You need the information on the Invoice to get the payslip otherwise it will be just guesswork maybe the accountant should have provided you with the Invoice and asked you to do the payslip with the CIS deductions 

Hi Julie

Agree with what you say about the materials changing all the figures but as I said above its impossible to say without the actual Invoice or further information but it seems that 20% CIS deduction has been charged on the total figure 

Gail72 wrote:

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What the accountant has asked me to do is create the posting entries needed for the subbie ltd company accounts and vat return

Am feeling really deflated as so wanted to learn

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 Hi Gail

I wouldn't feel deflated as it is not just you there has been a number of us who have looked at the payslip and no one has been able to come up with an answer as to how the figures you posted work out, maybe someone will come on later today and be able to give you an answer but if not I don't think there is any shame in going back to the accountant and asking how these figures came about as that's all part of the learning being able to actually ask someone when you don't know the answer and listening to the explanation given. 

Sorry for not being able to offer more help.

pictures wrote:

---

If I received a bill for labour from a subbie I'd itemise it like this:

Total labour figure £1,669.84

Plus 20% VAT £333.97

Minus 20% CIS deduction £333.97

Total payable to subbie £1,335.87

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 You'd have a very irate subby on your back   

He should be getting £1669.84  

 

I agree about the rounding error on the VAT 

Leger wrote:

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pictures wrote:

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If I received a bill for labour from a subbie I'd itemise it like this:

Total labour figure £1,669.84

Plus 20% VAT £333.97

Minus 20% CIS deduction £333.97

Total payable to subbie £1,335.87

---

 You'd have a very irate subby on your back   

He should be getting £1669.84  

 

I agree about the rounding error on the VAT 

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Oops! That's what happens when you copy and paste the wrong figures!

 

 

Gail72 wrote:

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 I spoke to the accountant today and he said reason he gave me the payslip example is he felt I was trying to learn it too text book like and life is never as some as here's the labour here's the materials etc ...he said very often the subbie will just pass over the payslip from the contractor and left to bookkeeper/accountant to record in accounts correctly

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Thats all well and good but any GOOD trainer, whether a formally qualified one or just acting in a mentor capacity, knows the best way to explain things to a student is to work through straight forward structured examples,adding complexity as they go and work you up to fully complex transacations.   On the basis you got the first one wrong I think he may well be doing you a diservice and not aiding your correct training by doing things in such a way at this juncture.

I do think he is right in giving you real world stuff, of course. BUT I disagree with the approach in terms of training but also on the basis of the notion of recording such 'correctly' when you are only getting a one sided version and that version is not from YOUR client, ie the one who you should be protecting from himself, HMRC and dodgy contractors, rather than accepting the word of the contractor that this payslip is correct.  

Someone should be challenging the idiot contractors and sub contractors who present such paperwork - ie that is the bookkeeper/Accountants role.  

Now if the said Accountant has done this then fair enough, but you indicated that the second example was a real case so we can only surmise that this has not been challenged.  You cannot just accept that the VAT is correct  and should find out why this has so little VAT included.  He should have the answers and it may well be correct, but as part of your learning he should now be able to supply the actual information in full so you understand it fully, clearly worringly he has yet to do that, unless of course at this stage, he is still waiting for your answer and/or any challenging questions.  

He should, as above,  also be encouraging his client to raise a proper invoice in the first place - self billing from contractors is not the correct way to go and is not acceptable in this area.   Besides we all know that such payslips can actually represent more than one invoice and may be (and very often are) wrong.  Contractors will always challenge subbies bills and often their payments bear no resemblance to the actual debt due. So the lack of information from a subbie to a contractor is of concern and corrective action MUST be encouraged - how else can you justify ANY of it in the event of an HMRC inspection - not just for CIS purposes but VAT and S/A tax or CT.

To be clar - Im not saying all contractors are bad. Ive seen some dreadful paperwork and attempts by subbies to extract more cash than is due. But that is the whole point of having the 'story' from both sides, which will be discovered and corrected as you process the transactions. The there or thereabouts method of Accountancy doesnt work at the best of times, but especially so in the CIS arena!

Just to add to John's fab explanation of processing the entries - I would list each of the VAT rated items separetely in the software (one PI, several entries) once, of course, the correct VAT status and amounts have been ascertained.  Easier when looking back if HMRC do visit!

Of course part of the confusion with the 'incorrect' deductions earlier may well have been a typo - we dont know without the actual question/'evidence' supplied by the accountant being included as a picture or pdf - so I would encourage such such in the future that might help folk formulating their answers.

Also perhaps look at some examples yourself via the HMRC CIS pdf helpfile - there are at least half a dozen or so with different situations to work through.

 

 

-- Edited by Cheshire on Tuesday 22nd of August 2017 02:19:11 PM

I'd been trying to think how to compose a reply but Joanne has put it so much more eloquently than I could. The accountant is doing you a dis-service , straight forward examples followed by more complicated ones definitely.

I'm from the other side. I work for a ltd company main contractor. Quite frankly if one of our many subbies presented me with that level of information they would not get paid - end of. We have on occasion assisted a small sub-contractor to produce his own invoices (by giving them a template and assisting them as to what figures to put in). Also from the other side, a contractor is legally obliged to produce a Statement of Deductions to a sub-contractor each month to assist with their accounts.

So called Payslips give the impression of employment, not self-employment. The accountant is giving you the impression that this type of paperwork is normal and acceptable, it isn't and as Joanne said, it won't stand up to an HMRC inspection. When we were last inspected HMRC wanted to know how we knew that what the subbies were invoicing was correct and they were very suspicious of any labour only subbies (luckily we have very, very few of these and those that are were very short term or highly specialist areas).

My company also sub-contract to much larger contractors and I can't tell you the number of times that their Payment Certificates to us (we do have formal self-billing arrangements with some, they have to be administered in a particular way and renewed annually) have been incorrect for one reason or another.

So don't feel downhearted. (And have that wine)

So in this case to start the bookkeeper would have a £1361.43 bank receipt on bank statement and this payslip info

Well Gail, I wouldn't like to be that contractor in the case of an HMRC inspection. And none of this helps you to learn the correct procedure so that you, in the future can advise your clients on the proper way of doing things.

i did say in my very first post

EG the Subcontractor is a ltd company and the contractor issues him a weekly payment slip

Leger wrote:

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Artois wrote:

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 Hi Gail

I wouldn't feel deflated as it is not just you there has been a number of us who have looked at the payslip and no one has been able to come up with an answer as to how the figures you posted work out, 

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 I gave Gail the correct answer upthread. The mistake she had made was to deduct the VAT from the invoice rather than adding it.

Hi John

Sorry I have done you a disservice there but what I wrote does not quite read as it sounded in my head, yes you did give Gail the correct answer but I was talking more about how the VAT figure came about after Gail said part of her test was to raise the Invoice.

Hi Gail 

The Bookkeeper would also have the Invoice, which would be needed for the VAT return

 

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-- Edited by Artois on Tuesday 22nd of August 2017 02:53:23 PM

Gail, your figures are exactly the figures I come to. You cannot possibly be expected to get to the so called "correct" figure without knowing why the amount of VAT is not the standard 20%.

In a real life situation you would say to your client, the VAT seems wrong, you need to check why. If I wasn't told otherwise I would assume someone (main contractor perhaps) has made an error in the calculation.

Sorry Julie i wasnt ignoring your answer - when i got the info from accountant it was all labour i came away from here so didnt refer and worked it out how i understood it - and came up with same as you!!!!!!!!!!!!

So im sort of getting it yes???