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christine-bulbec
April 26, 2023
Question

CIS Credits

  • April 26, 2023
  • 2 replies
  • 0 views

I have seen several questions about raising credits under a CIS supplier ledger but the answers are all misleading.  I have raised CIS credits WITH 20% CIS deductions to be applied;  is this the correct way to process a credit for a CIS supplier please?  Then what is the best way to allocate it to an invoice it needs to clear?  

2 replies

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Ashleigh1
April 26, 2023

Hello Christine-bulbec, Thanks for posting on the Community page, A credit note is Quickbooks will not have CIS amounts on them. You would raise the credit from the amount outstanding on the invoice that is to be credited and assign it as usual.

paul72
paul72
April 26, 2023

Hi @christine-bulbec 

The truth is that Intuit / QBO do not understand CIS. Certainly not when it comes to credit notes.

It's been raised as an issue on here many times over the last few years (both sales & purchase credits have the same problem).

 

By not building in the CIS function into Credit Notes, QBO treats them (for CIS purposes at least) as a part payment rather than a reduction in the value of the work done. Since CIS is cash-based (the deduction date is the date of payment) QBO is effectively saying that the work was done, the credit note was the payment & the deduction is owed to HMRC.

Ridiculous!

 

There are a couple of options for a workaround but I think the most straightforward is to edit the Bill in QBO so that it's split over two lines:

   (1)   CIS20%

   (2)   Materials (which is equal to the value of the credit)

Now enter the credit as Materials.

 

As long as this is done before the bill has been paid (or relevant CIS Return sent), this should leave all accounts (as well as CIS & VAT) correct.  I don't use QBO to file CIS so the return would need to be thoroughly looked over before sending to make sure it works.

 

Hope this helps.

C
christine-bulbecAuthor
April 26, 2023

This is indeed the most sensible answer I have had all day!  You are right, the system is totally in-ept when it comes to their CIS module.  I have worked for 30 years with Sage, never touched QB until my new employment and although it has some fab sections, the CIS does not!  I spent over 3 hours alone last week emailing out just 20 CIS deduction certs because the system cant email them itself, let alone in one batch!  

 

Sadly my credit note issue is to clear out very old CIS invoices (oh yes bills!) posted to a subbys ledger.  The bill has been part paid to subby, its the balance that is not being paid to subby, I need to raise a credit for.  But like you say, if I post the credit to the invoice balance it sends it to a CIS return!!!!!!  And his invoice is for all labour, so no materials to even be able to use the method you have kindly recommended.  


Its back to the drawing board, or maybe raise the credit and post it to the invoice and ensure I check the CIS return done via Gov site in a few weeks time is processed correctly 

 

 

paul72
paul72
April 27, 2023

Hi @christine-bulbec 

 

Sorry - I should have explained a little deeper.  What you're actually trying to do reduce the value of the original Bill to the amount that's been paid.  However, if you do this, you'll upset the VAT Return, etc.

(I presume that you have reclaimed VAT on the full value?)

 

The trick in splitting the invoice is to make it partly CIS-able & partly non-CIS-able (excuse the syntax).  Since the Supplier Credit will be treated as a Payment by QBO you have to make that Payment non-CIS.

I chose Materials because it's CIS related (without being deductible) & might make the process a bit more obvious if it's viewed at a later date - but you could just as easily make this another account/category.

 

Where I'm at a slight disadvantage is not using QBO to file CIS Returns (although you might envy that!) - so I'm not entirely sure how modifying old Bills will affect Filed CIS Returns.

If QBO was correct in its handling of CIS then only actual Payments should affect the CIS Returns & amending a Bill should not upset the Returns - it should simply reduce the CIS Withheld Liability account.

However, as I know that Supplier Credits are treated by QBO as Payments against Bills, I added the comment about thoroughly checking the Return(s) afterwards.

 

Hope this all makes sense (I've re-written it a few times & it's all starting to blur!).

Let me know if not & I'll try to follow up with an example.

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