Sales transactionsThe net value of each CIS item goes into the CIS materials or CIS labor ledger account.
The deduction of the CIS amount from the net value of the invoice reduces the amount your customer owes you.
For example, for sales invoices of £200 Labour with a 30% deduction rate. | Ledger Account | Debit | Credit |
|---|
| Debtor Control | 140 |
| | CIS Withheld | 60 |
| | CIS Labour |
| 200 |
Purchase invoicesThe net value of each CIS item recorded against the CIS materials expense or CIS labor expense ledger account.
As the VAT is reversed, purchase invoices have two entries to the VAT on Purchases ledger account. The two VAT entries cancel each other out. After the CIS reduction, the net value of the invoice is less, reducing the amount you owe your supplier. For example, for a purchase invoice of £100 labour with a 30% deduction rate, you owe your supplier £70. | Ledger Account | Debit | Credit |
|---|
| Trade Creditors |
| 70 | | CIS Withheld |
| 30 | | CIS Labour Expense | 100 |
| | VAT on Purchases | 20 |
| | VAT on Purchases |
| 20 |
For credit notes, we update your ledger accounts in the same way but in reverse. |