CIS Example test questions - The Book-keepers Forum (UK)

Gail72 · Veteran Member

CIS Example test questions

Gail72 · Veteran Member

The subble is vat registered Joanne - a vat registered ltd company

pictures · Senior Member

Hi Julie
Sorry, hope I wasnt coming across as implying all contractors are 'dodgy' as Ive worked with some corking ones and its pretty obvious that you know what you are doing. I have, as I indicated seen some dodgy subby stuff going on....like purchasing tools and billing contractors, just as one eg. Ive also worked with formal self billing - as you say, special rules to follow and such who do it are (usually) pretty hot on their admin and such. Totally agree on the IR35 issue - lack of 'encouraging' subbies to bill properly means storing this problem one up for later!
Think we should all just a few bottles of wine!
Keep going Gail - will get there in the end, although Im thinking perhaps you might be better getting some test examples from the guys on here, if they are willing.

Gosh no, of course I didn't take any offence. I've seen all sorts in my time too. I'm hard though it s a bit like your mantra of no VAT receipt, no claim. No invoice, no pay!

Cheshire · Master Book-keeper

Gail72 wrote:
The subble is vat registered Joanne - a vat registered ltd company

So why is VAT not added to all of the labour? Why has it only been added to two of them items? Hence my Q as to what has been built?

Cheshire · Master Book-keeper

pictures wrote:

Hi Julie
Sorry, hope I wasnt coming across as implying all contractors are 'dodgy' as Ive worked with some corking ones and its pretty obvious that you know what you are doing. I have, as I indicated seen some dodgy subby stuff going on....like purchasing tools and billing contractors, just as one eg. Ive also worked with formal self billing - as you say, special rules to follow and such who do it are (usually) pretty hot on their admin and such. Totally agree on the IR35 issue - lack of 'encouraging' subbies to bill properly means storing this problem one up for later!
Think we should all just a few bottles of wine!
Keep going Gail - will get there in the end, although Im thinking perhaps you might be better getting some test examples from the guys on here, if they are willing.

Gosh no, of course I didn't take any offence. I've seen all sorts in my time too. I'm hard though it s a bit like your mantra of no VAT receipt, no claim. No invoice, no pay!

Good, as none meant at all. Glad to see a fellow hard woman and someone using the above mantra. On this score that highlights the need for a VAT invoice from said subby, even if a chunk of the VAT is zero rated (which we have yet to ascertain). HMRC will have fun with this one.

Artois · Guru

Cheshire wrote:
Gail72 wrote:
I have just checked with the accountant and this example is all labour

Therefore i would have expected it to be

Labour 1669.84

Materials 0.00

Total Before Vat 1669.84

VAT @ 20% 333.97

Total before CIS 2003.81

CIS @ 20% Labour 333.97

Total payable by contractor 1669.84

I know because i havent got back to the 1361.43 that the subbie has been paid ive gone wrong All i know is the 308.41 difference is the 333.96 tax @20% on payslip less the 25.55 vat on payslip

I could cry

Can we all just stop a minute? Am I going bonkers - no VAT because its all labour!!
Doug, John, Julie - please correct me or confirm - there should be VAT on labour if the subbie is VAT registered, UNLESS there its relating to certain types of build?
Gail - do you know what was being 'built' in this scenario?
Hi Joanne
Yes your not going bonkers VAT is charged on Labour & Materials unless a new build,
I am beginning to believe that I am going bonkers as I had just came to the conclusion that the payslip must be for different Invoices some which are for Zero rated work and the other 2 for standard
Hi Gail
Why are you changing the figures, if you have the payslip that the accountant gave you then you should be questioning them on the VAT amount and if it is correct not redoing the payslip

-- Edited by Cheshire on Tuesday 22nd of August 2017 03:05:54 PM

pictures · Senior Member

There should be VAT on labour yes, unless its a certain type of build.

There is a possible scenario in that each amount refers to a different job so one could be not liable to VAT maybe because its a new build but if that is the case, is Gail expected to have a crystal ball to know this! I don't know about carpet and vinyl, we deal in things that go through pipes so not my area and to be honest I can count one one hand the number of VAT exempt jobs the company I work for has been involved in the last 10 years so I'd have to look things up each time.

pictures · Senior Member

I have to go now, but will check back tomorrow as its been really interesting.

Cheshire · Master Book-keeper

Doug and Julie - my thoughts exactly on the payment covering either different jobs with differing VAT rates or the contractor pushing the boundaries on the VAT applicable to the work done in a new build. Would need to check out the act /case law round carpets and vinyl as these are not what I would class as building materials/fabric of the building nor quite the same as full fitted kitchen type stuff, but this is certainly confusing the overall question and one I suspect the mentor accountant might well be waiting to see if Julie picks up on.

Julie
I would go back to your mentor and ask why is there no VAT at standard rate on three of the items and what specifically is allowing this to be zero rated? TTell him - if he was your client then you would be asking such and also asking for copies of the invoices making up this payment.

Cheshire · Master Book-keeper

pictures wrote:
I have to go now, but will check back tomorrow as its been really interesting.

lol, go and get some work done hard woman! Maybe I should do some as well - my boss is a right old cow sometimes!

Gail72 · Veteran Member

Im not changing the figures

What ive done is tried to take the approach advised ... ie base my answer on known facts only and on the facts i have ie its all labour and subbie is vat reg then with those facts i would would conclude the situation should be

Labour 1669.84

Materials 0.00

Total Before Vat 1669.84

VAT @ 20% 333.97

Total before CIS 2003.81

CIS @ 20% Labour 333.97

Total payable by contractor 1669.84

There is a difference between what i can do with the facts and the actual amount the subbie was paid of £308.41

So i was going to present my answer to the accountant as ... based on the facts i have been given this is what it should be ..... and there are answers and explanations needed for the £308.41

ie if a bookkeeper was given this payslip and the receipt figure in the bank - thats what they would have to do, go back to the subbie and say the facts supplied say it should be as above please can i have reasons to explain why it is not that

Cheshire · Master Book-keeper

Gail72 wrote:
Im not changing the figures

What ive done is tried to take the approach advised ... ie base my answer on known facts only and on the facts i have ie its all labour and subbie is vat reg then with those facts i would would conclude the situation should be

Labour 1669.84

Materials 0.00

Total Before Vat 1669.84

VAT @ 20% 333.97

Total before CIS 2003.81

CIS @ 20% Labour 333.97

Total payable by contractor 1669.84

There is a difference between what i can do with the facts and the actual amount the subbie was paid of £308.41

So i was going to present my answer to the accountant as ... based on the facts i have been given this is what it should be ..... and there are answers and explanations needed for the £308.41

ie if a bookkeeper was given this payslip and the receipt figure in the bank - thats what they would have to do, go back to the subbie and say the facts supplied say it should be as above please can i have reasons to explain why it is not that

Hi Gail

You are right to challenge this. BUT a couple of issues arise:-

Without the sales invoice you might well be including the item in the wrong VAT quarter as the tax point is different between invoice date and payment date on the standard scheme

If you present the subbie with a why is this paid £308.41 short to my calculations then the subbie will just shrug his shoulders and ask you to chase for the rest of it.

What you should say is - Ive got this payslip and it makes no sense. There is an amount paid for labour with VAT and an amount without VAT - where are the sales invoices. or if you really go with the there or there abouts accounting approach, the very least you ask is - why is there no VAT on these three items on this payslip?

Ie ask the question to clarify YOUR understanding before you give an answer (to say that a payment is short or over or whatever).

I and the others suspect this may well be in relation to a new build property where three of the lines are then zero rated. Do you understand how this works? This may well be, as I indicated before, another test from the Accountant, because with CIS VAT registereds you need to have a very very good understanding of the VAT act relating to construction as this is a fundamental part of the billing/invoicing process alongside CIS.

Artois · Guru

Gail72 wrote:
Im not changing the figures

What ive done is tried to take the approach advised ... ie base my answer on known facts only and on the facts i have ie its all labour and subbie is vat reg then with those facts i would would conclude the situation should be

Labour 1669.84

Materials 0.00

Total Before Vat 1669.84

VAT @ 20% 333.97

Total before CIS 2003.81

CIS @ 20% Labour 333.97

Total payable by contractor 1669.84

There is a difference between what i can do with the facts and the actual amount the subbie was paid of £308.41

So i was going to present my answer to the accountant as ... based on the facts i have been given this is what it should be ..... and there are answers and explanations needed for the £308.41

ie if a bookkeeper was given this payslip and the receipt figure in the bank - thats what they would have to do, go back to the subbie and say the facts supplied say it should be as above please can i have reasons to explain why it is not that

Hi Gail

When I said changing the figures I mean that you are changing them from what you received at the beginning on the payslip from the accountant to what you believe is right which may well be but it is still at this moment in time only an assumption, even though there are some errors in the deductions on the payslip this may still be the correct final payment and VAT total, without the accountant confirming this or seeing the Invoice we will never know, but using the payslip that they provided John has shown you the transactions needed within the software using the figures provided whether right or wrong which is what they asked for.

If one of my Sub-contractors were to give me this payslip the first thing I would do would be to check it against the relevant invoices given to the contractor for the correct rates of VAT and if I believed the payment was wrong I would ask for it to be altered to the correct amount

I am now going for a beer!!!

Gail72 · Veteran Member

Doug i know the figures i have put above as my answer to the accountant are different to the actual figures on the payslip - that is simply because as i explained above i am trying to use the facts only approach

I know there is a £308.41 difference between my end figure and the actual answer but my end answer is what i get to based on the facts i have

Therefore until i go back to the accountant which as a couple are suggesting i think the accountant wants me to do to "test" me to ask for the reasons for the difference not just make my answer come to what is on the payslip - as lets face it how on earth could i given i have only just started learning CIS and am missing information - i do think again like others are suggesting that this is the accountant testing me to look deeper every time and ask questions not just assume what is on the payslip is correct - ie he is testing me to see if i say something does not seem right

Artois · Guru

Hi Gail

I am not sure if you are registered as an agent, but HMRC run talking points meetings which you take part in online (free), there is one this Thursday 24th between midday and 1pm on the CIS, not sure if you are allowed to sign up if you are not an agent but maybe someone else might know if you can or not, or maybe try and look on their website yourself to see.

Artois · Guru

Gail72 wrote:
Doug i know the figures i have put above as my answer to the accountant are different to the actual figures on the payslip - that is simply because as i explained above i am trying to use the facts only approach

I know there is a £308.41 difference between my end figure and the actual answer but my end answer is what i get to based on the facts i have

Therefore until i go back to the accountant which as a couple are suggesting i think the accountant wants me to do to "test" me to ask for the reasons for the difference not just make my answer come to what is on the payslip - as lets face it how on earth could i given i have only just started learning CIS and am missing information - i do think again like others are suggesting that this is the accountant testing me to look deeper every time and ask questions not just assume what is on the payslip is correct - ie he is testing me to see if i say something does not seem right

I totally agree with what you are saying but none of us can take a facts only approach because without the actual Invoice no one knows what the facts are, your figures could be right or the payslips could be right so I think if I was the accountant setting you a test the first question I would expect you to ask is why is the VAT only on 2 items and can I see the Invoice.

Leger · Master Book-keeper

Hi Gail, first of all an apology. I had assumed it was from the contractors pov, and not the subbies. (It's that Joanne, she's a bad influence on me and I didn't read the OP correctly biggrin biggrin )

Yes, it's a sales invoice, not a purchase invoice.

Like the other guys on this thread, I am mortified that the accountant has given you such a convoluted payslip to start off with. Because I approached it from the Contractor pov, I assumed the contractor knew why the VAT was only £25.55.

There is simply not enough info on that payslip for you to record it in the accounts. As has already been pointed out, the subby should have raised an invoice to the contractor.

Hi Joanne. My understanding is that, if the contract is zero rated, then the labour is too. Assuming this is for a new build, then screeding and laying vinyl down will probably qualify for zero rated, although I'm no expert. In practice, the contractor would say to the subby, this is a new build, I don't want you to charge me VAT on the qualifying elements. And then provide the evidence required.

Gail72 · Veteran Member

re "the tax point is different between invoice date and payment date on the standard scheme"

so if eg vat return is 31st December and work is paid say 2 and half weeks behind so eg paid 15th January for work ending 31st December

Would that work go in 31st December vat return

Gail72 · Veteran Member

I too am starting to think this was a mean one to give me to start off with - but maybe me saying to him i really wanted to learn didnt help ... i dont know

Funnily enough it is starting to seem much clearer to me now than this time yesterday - so you guys have helped big time - thank you so much as yesterday i was ready to slash my wrists over it xx

If someone could guide me re the

re "the tax point is different between invoice date and payment date on the standard scheme"

so if eg vat return is 31st December and work is paid say 2 and half weeks behind so eg paid 15th January for work ending 31st December

Would that work go in 31st December vat return

I think i will be in a position to construct an answer to this dam test for the accountant!!!

I really be interested in any books anyone can recommend or if anyone knows of training courses seminars etc - have started to look at HMRC site but unless im not looking in same place as you what i read seems to take it that you have ample knowledge already ..... im looking for the dummies guide to CIS

Gail72 · Veteran Member

Doug

Just seen this message

I am not sure if you are registered as an agent, but HMRC run talking points meetings which you take part in online (free), there is one this Thursday 24th between midday and 1pm on the CIS, not sure if you are allowed to sign up if you are not an agent but maybe someone else might know if you can or not, or maybe try and look on their website yourself to see.

Thank you for that - really kind x

Do you have the link please?

Gail72 · Veteran Member

I can only find this which was on the 11th and 16th

www.gov.uk/government/news/webinars-emails-and-videos-on-the-construction-industry-scheme-cis

Cheshire · Master Book-keeper

Hi Gail!

Im not really sure of your background and knowledge to date, so am wary of saying something as I dont want to offend. I did try to dig around to see if we ever had an intro from you but couldnt find one (and again gave up due to time constraints!) so if you have done one can you link to it here, or just give us an update - what exams passed/ taken, level of study, prof body sort of stuff so we know your knowledge base and answer appropriately).

A question - why are you specifically interested in doing CIS?

-- Edited by Cheshire on Wednesday 23rd of August 2017 07:14:48 AM

Cheshire · Master Book-keeper

Leger wrote:
(It's that Joanne, she's a bad influence on me and I didn't read the OP correctly )
Hi Joanne. My understanding is that, if the contract is zero rated, then the labour is too. Assuming this is for a new build, then screeding and laying vinyl down will probably qualify for zero rated, although I'm no expert. In practice, the contractor would say to the subby, this is a new build, I don't want you to charge me VAT on the qualifying elements. And then provide the evidence required.

wink biggrin biggrin Me a bad influence!! Ive waited a long time to hear someone say that! Was such a goody two shoes growing up.

I get the screeding job, the others - hmmmm. Wish I had the time to check!!!!

Artois · Guru

Cheshire wrote:
Leger wrote:
(It's that Joanne, she's a bad influence on me and I didn't read the OP correctly )
Hi Joanne. My understanding is that, if the contract is zero rated, then the labour is too. Assuming this is for a new build, then screeding and laying vinyl down will probably qualify for zero rated, although I'm no expert. In practice, the contractor would say to the subby, this is a new build, I don't want you to charge me VAT on the qualifying elements. And then provide the evidence required.
Me a bad influence!! Ive waited a long time to hear someone say that! Was such a goody two shoes growing up.
I get the screeding job, the others - hmmmm. Wish I had the time to check!!!!

I thought that all labour on a new build was zero-rated but some materials are not, Carpets being one of them but vinyl is allowed (not positive)

Cheshire · Master Book-keeper

Artois wrote:

I thought that all labour on a new build was zero-rated but some materials are not, Carpets being one of them but vinyl is allowed (not positive)

Oh now I am cracking up. Got the carpet thing stuck in my head! confuse confuse

Artois · Guru

I used to get it stuck on my knees!

pictures · Senior Member

Gail72 wrote:

re "the tax point is different between invoice date and payment date on the standard scheme"

so if eg vat return is 31st December and work is paid say 2 and half weeks behind so eg paid 15th January for work ending 31st December

Would that work go in 31st December vat return

You'd need to know which VAT scheme they are on. From what I understand cash accounting is for smaller (VATable turnover less than 1.35million) VAT registered companies to help with their cashflow. If a company is on the cash accounting scheme they pay VAT on sales at the point they are paid, not the point of invoice and reclaim VAT on purchases at the point they pay. Its subject to various other rules of course. But if they are on the Standard scheme then its the tax point on the invoice not when they were actually paid.

Artois · Guru

Hi Gail

Just wondering as I am sure others are as well if you have received any feedback from the accountant concerning this post?

pictures · Senior Member

I'm really interested to know the outcome too.

Cheshire · Master Book-keeper

Gail doesnt appear to have back on BKN since asking about the VAT tax point issue.

I thought it was my asking for her background that killed off the conversation, but she was offline before that was posted!

Redspottedhanky · Veteran Member

I'm in no way an expert on these subjects, but I've been through a VAT investigation on the issue of VAT rates for qualifying builds, so I know some stuff! Doug is right in saying that carpet is not allowed, as it is classed as a finishing of the building, but vinyl is allowable for the lower VAT rate. One that I find quite interesting is that if you have an alcove in a room, and build in a wardrobe, it qualifies as building materials if 3 sides are against walls, but it is furniture if you have to put on an end panel, or if it bridges over a bed/dressing table.

Another thing to note is that as well as there being a zero rate for new builds, there is also a 5% rate for substantial changes of use to a building, such as a pub to a house, or a care home to a HMO.

Cheshire · Master Book-keeper

Hi Claire
Didnt Doug say carpet was allowed?
wink wink

-- Edited by Cheshire on Wednesday 13th of September 2017 01:20:32 PM

Redspottedhanky · Veteran Member

Artois wrote:
Cheshire wrote:
Leger wrote:
(It's that Joanne, she's a bad influence on me and I didn't read the OP correctly )
Hi Joanne. My understanding is that, if the contract is zero rated, then the labour is too. Assuming this is for a new build, then screeding and laying vinyl down will probably qualify for zero rated, although I'm no expert. In practice, the contractor would say to the subby, this is a new build, I don't want you to charge me VAT on the qualifying elements. And then provide the evidence required.
Me a bad influence!! Ive waited a long time to hear someone say that! Was such a goody two shoes growing up.
I get the screeding job, the others - hmmmm. Wish I had the time to check!!!!
I thought that all labour on a new build was zero-rated but some materials are not, Carpets being one of them but vinyl is allowed (not positive)

Gotta give the man credit where it's due, he said not! Another one of HMRCs random rules. Never found out where they stood on laminate flooring though (we adjusted the property development and put vinyl in wherever possible instead!).

Cheshire · Master Book-keeper

Cheshire wrote:
Hi Claire
Didnt Doug say carpet was allowed?

-- Edited by Cheshire on Wednesday 13th of September 2017 01:20:32 PM

Apologies Doug - I was relying on memory. Which I clearly shouldnt do!

Cheshire · Master Book-keeper

Redspottedhanky wrote:

Gotta give the man credit where it's due, he said not! Another one of HMRCs random rules. Never found out where they stood on laminate flooring though (we adjusted the property development and put vinyl in wherever possible instead!).

Certainly!

But is it an HMRC rule? Surely its what is written in VAT act and case law that counts.

Artois · Guru

Cheshire wrote:
Cheshire wrote:
Hi Claire
Didnt Doug say carpet was allowed?

-- Edited by Cheshire on Wednesday 13th of September 2017 01:20:32 PM
Apologies Doug - I was relying on memory. Which I clearly shouldnt do!

Hope your not talking about me behind my back!!

No apologies needed, it would be nice if Gail was to return though and let us all know what the outcome was

Leger · Master Book-keeper

Artois wrote:
Hope your not talking about me behind my back!!

I had that problem when I was a taxi driver!!

Cheshire · Master Book-keeper

boom boom!

It would be all good about you boys anyway!!!!

Artois · Guru

Cheshire wrote:
Redspottedhanky wrote:

Gotta give the man credit where it's due, he said not! Another one of HMRCs random rules. Never found out where they stood on laminate flooring though (we adjusted the property development and put vinyl in wherever possible instead!).
Certainly!
But is it an HMRC rule? Surely its what is written in VAT act and case law that counts.

Carpets are included in this (22d) of

http://www.legislation.gov.uk/ukpga/1994/23/schedule/8/part/II/chapter/5

And as far as I am aware laminate flooring is classed as building materials and zero rated the same as vinyl

Cheshire · Master Book-keeper

Just to clarify my post
The 'certainly' - was to giving you credit.

The 'is it an HMRC rule' ....... - was in reference to Claire's 'another one of HMRCs random rules', as opposed to any specific comment on carpets, laminate or other floor covering or indeed anything else. Ie - HMRC dont make up the rules, despite the fact that they think they do and do 'interpret' them as they see fit some times (which can differ from one inspector to another it appears!)

Artois · Guru

Cheshire wrote:
Just to clarify my post
The 'certainly' - was to giving you credit.

The 'is it an HMRC rule' ....... - was in reference to Claire's 'another one of HMRCs random rules', as opposed to any specific comment on carpets, laminate or other floor covering or indeed anything else. Ie - HMRC dont make up the rules, despite the fact that they think they do and do 'interpret' them as they see fit some times (which can differ from one inspector to another it appears!)

Hi Joanne

I never even thought anything else other than the 'certainly' was about giving credit (I love credit) maybe it gave the wrong impression by including your quote in my answer but it was more to show that it does appear in the VAT legislation and not just a random rule made by HMRC or in fact by myself

I suppose I've ruined my chance of getting any cakes baked for me now!

Cheshire · Master Book-keeper

Dead impressed (extra credit there!) you went and fished out the relevant bit of the law of course you would have cakes baked for you! Sush though, dont tell the others!

Although Ive not done any baking for a while as it appears his nibs is far too busy for my buns and baps!

Leger · Master Book-keeper

Doug: I suppose I've ruined my chance of getting any cakes baked for me now

Ahem, there is a queue you know

Joanne: of course you would have cakes baked for you! Sush though, dont tell the others!

Oh I see, favouritism!!!

Cheshire · Master Book-keeper

Leger wrote:
Doug: I suppose I've ruined my chance of getting any cakes baked for me now
Ahem, there is a queue you know
Joanne: of course you would have cakes baked for you! Sush though, dont tell the others!
Oh I see, favouritism!!!

Erm, oops, nope no favourtism at all, dont know what you mean. Didnt mean it really. Looks like when I next bake I will have to make 3 batches and order 3 lots of Securicor deliveries to prevent cakegate carnage on the motorways wink

Leger · Master Book-keeper

Cakegate - that made me chuckle. biggrin