Relevant Contracts Tax using Reverse Charge - subcontractor

Create the principal contractor

1. Click Customers, then click New.
2. Enter the relevant details for the principal contractor.
3. Click Save, then click Close.

The examples use customer account reference BLOGGS01.

Create RCT withheld nominal code

If you already have a nominal code for RCT, you can move to the next section.

If not, we recommend you create a new nominal code within the Capital & Reserves section of the chart of accounts:

1. Click Nominal codes, then Wizard.
2. In Name, enter RCT withheld.
3. In the Type list, click Capital & Reserves.
4. In the Category list, click Reserves.
5. In N/C type in 3150.
   
   

   Change this to a different number within the Capital & Reserves section of the chart of accounts, if needed.

6. Click Next.
7. Click No, there is no opening balance to enter.
8. Click Create.

Record work completed for the principal contractor

1. Click Customers, then click Batch invoice.
2. Enter the relevant information to record the invoice details, for example: 
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   BLOGGS01	Invoice Date	4001 (Sales)	Labour Charges	200.00	T20	0.00
   BLOGGS01	Invoice Date	4000 (Materials)	Materials	150.00	T0	0.00

    CAUTION: The tax codes used here are an example only. Use the correct tax code for the VAT applied on the customer invoice. 

3. Click Save, then click Close.

Record the RCT withheld by the principal contractor

Using a credit note

Recording RCT withheld as a sales credit reduces customer turnover values. To see customer turnover on reports, such as the Sales Ledger Turnover Period and Year to Date Report, follow the steps in the Using a credit note and journals section. 

1. Click Customers, then click Batch credit.
2. Enter the information required to record the amount of RCT is withheld, for example: 
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   BLOGGS01	Date	3150	RCT withheld	40.00	T9	0.00

3. Click Save, then click Close.

Using a credit note and journals

1. Click Customers, then click Batch credit.
2. Record the amount of RCT being withheld as follows: 
   

   A/C	Date	N/C	Details	Net	T/C	VAT
   BLOGGS01	Date	3150	RCT withheld	0.00	T9	40.00

3. Click Save, then click Close.
4. Click Nominal codes, then click Journal entry.
5. Enter a reference and the same date you used in step 2.
6. Record the amount of RCT being withheld as follows: 
   

   N/C	Details	T/C	Debit	Credit
   3150 - RCT withheld	RCT withheld	T9	40.00	0.00
   2200 - VAT on Vatable Sales	RCT withheld	T9	0.00	40.00

7. Click Save, then click Close.

Receive payment from the principal contractor

1. Click Bank accounts and select the relevant bank account.
2. Click Customer receipt.
3. In the Account list, click the principal contractor's account.
4. Click OK and complete the Date and Reference, as required
5. Select the SC, then click Pay in Full.
6. Select the SI, then click Pay in Full.
   
   

   The outstanding amount is the difference between the SI and SC and appears in the Amount box.

7. Click Save, then click Close.

A sales receipt posts for the outstanding amount.

Record a refund from Revenue

1. Click Bank accounts, then click Bank receipt.
2. Enter the relevant details, for example: 
   

   Bank	Date	N/C	Details	Net	T/C	VAT
   Bank N/C	Date of	3150 (RCT)	RCT withheld	40.00	T9	0.00

3. Click Save, then click Close.

If you receive an RCT bill rather than a refund, you must post a bank payment rather than a bank receipt.