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BioFires
January 4, 2023
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CIS Gross 0%

  • January 4, 2023
  • 2 replies
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I have been asked to "sort out" a CIS problem for a friend and Im struggling.  I have one sub contractor that is Standard 20% CIS and one that is Gross 0%.

 

In Category for Standard 20% CIS I have selected "CIS cost standard (20%)"  What VAT rate do I use ?  The previous book keeper used 20.0% RC CIS (0%),  yet online in a youtube video it uses Standard 20%.

 

In Category for Gross 0% CIS I have selected "CIS gross (0%)"  What VAT rate do I use ?

 

Ive never been involved with CIS before so could someone help please.

 

 

Best answer by paul72

Hi @BioFires 

 

The YouTube video was probably made before RC VAT (the gift that keeps on giving) was dreamt up by the  goggle-eyed loons at HMRC.

 

In general, if the goods/services are CIS-related & would ordinarily be standard-rated for VAT then you should use 20.0% RC CIS in QBO.

The fact that the subcontractor has gross or 20% status makes no difference.

The subcontractor's VAT status is important however.  Always follow what's shown on their invoice - if they mention RC VAT then you must use the RC code.  If they're not VAT registered then RC VAT does not apply - use Z=0 or Exempt.

 

There are however some glaring exemptions - most notably for labour only supply.

That's correct - the one area that HMRC identified as particularly susceptible to VAT fraud is not subject to the anti-fraud measure that is RC VAT (I really do wish I was making this up!).

 

See https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services for guidance.

There are a couple of flowcharts there too which might help.

2 replies

A
AbegailS_
January 4, 2023

Hi there, @BioFires.

 

When creating your transaction, select your subcontractor, QuickBooks will use their CIS rate to calculate the CIS to deduct (CIS withheld). If materials are a part of this transaction, you can add these on here too.

 

You can read more on the details of how QuickBooks calculates Construction Industry Scheme: CIS in QuickBooks Online.

 

Also, the links below provide information on how QBO handles CIS and process the tax return.

 


If you still need assistance in recording the CIS deduction, click the Reply button below and add a comment. I’ll get back to help you. Have a great rest of the day.

paul72
paul72Answer
January 5, 2023

Hi @BioFires 

 

The YouTube video was probably made before RC VAT (the gift that keeps on giving) was dreamt up by the  goggle-eyed loons at HMRC.

 

In general, if the goods/services are CIS-related & would ordinarily be standard-rated for VAT then you should use 20.0% RC CIS in QBO.

The fact that the subcontractor has gross or 20% status makes no difference.

The subcontractor's VAT status is important however.  Always follow what's shown on their invoice - if they mention RC VAT then you must use the RC code.  If they're not VAT registered then RC VAT does not apply - use Z=0 or Exempt.

 

There are however some glaring exemptions - most notably for labour only supply.

That's correct - the one area that HMRC identified as particularly susceptible to VAT fraud is not subject to the anti-fraud measure that is RC VAT (I really do wish I was making this up!).

 

See https://www.gov.uk/guidance/vat-domestic-reverse-charge-for-building-and-construction-services for guidance.

There are a couple of flowcharts there too which might help.

    B
    BioFiresAuthor
    January 5, 2023

    HI @paul72 

     

    Thanks so much for this. Massive help.

    The previous book keeper applied 20% to a 0% CIS Sub Contractor.  So I have altered the invoice accordingly now which has obviously left a balance of stopped CIS money due to the sub contractor in question.  It hasn't affected the VAT return only the CIS returns.

     

    So am I correct in assuming, the VAT was subject to RC in the relevant Vat return and has been dealt with ?

     

    Kind Regards

     

     

     

    paul72
    paul72
    January 5, 2023

    Hi @BioFires 

     

    Sorry - I'm not 100% sure what you're asking.

     

    A Bill from a Gross Subcontractor was incorrectly entered as a 20% Deduction Subcontractor?

    You have now corrected that - so you have a 20% balance to pay them?

    (& the CIS returns have been affected - which might cause a problem)

     

    On it's own (if you used the same VAT code) that should not have affected the VAT & you don't need to worry about the VAT Return.  CIS & VAT are separate things.

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