Sage 50 Accounts - Record off-payroll working (IR35) deductions withheld by your client

1. On the navigation bar click Customers then click New/edit.
2. Enter the account details for your client, click Save then click Close.

We recommend you create a new nominal code within the Overheads area of your chart of accounts, for example, within Gross wages.

1. On the navigation bar click Nominal codes then click New.
2. Complete the nominal record details as follows:

   N/C	Enter the new nominal code number, for example, 7020.
   Name	Enter the name for the new nominal code, for example, IR35 Withheld.

3. Click Save then click Close.

In the following example, you've invoiced your client for £1000, consisting of £800 for labour, and £200 for expenses. Your client pays you the money due, but retains an IR35 deduction of £40, which he pays to HMRC on your behalf. The tax codes entered here are an example only.

1. On the navigation bar click Customers then click Batch invoice.
2. Enter the invoice details, for example:

   A/C	Date	N/C	Details	Net	T/C	VAT
   CLIENT01	Invoice date	4000	Expenses	200.00	T0	0.00
   CLIENT01	Invoice date	4001	Labour	800.00	T0	0.00

3. Click Save then click Close.

1. On the navigation bar click Customers then click Batch credit.
2. Enter details of the IR35 deduction withheld, for example:

   A/C	Date	N/C	Details	Net	T/C	VAT
   CLIENT01	Date	7020	IR35 Withheld	40.00	T9	0.00

3. Click Save then click Close.

Allocate the credit to the customer invoice and record the client's payment

1. On the navigation bar click Bank accounts, click the relevant bank account then click Customer receipt.
2. In Account enter the client's account code then enter a date for the transaction.
3. Click the customer credit, click Pay in Full, click the customer invoice then click Pay in Full.
4. Click Save then click Close.

1. On the navigation bar click Customers then click New/edit.
2. Enter the account details for your client, click Save then click Close.

We recommend you create a new nominal code within the Overheads area of your chart of accounts, for example, within Gross wages.

1. On the navigation bar click Nominal codes then click New.
2. Complete the nominal record details as follows:

   N/C	Enter the new nominal code number, for example, 7020.
   Name	Enter the name for the new nominal code, for example, IR35 Withheld.

3. Click Save then click Close.

In the following example, you've invoiced your client for £800 for labour. Your client pays you the money due, but retains an IR35 deduction of £40, which he pays to HMRC on your behalf. The tax code entered here is an example only.

1. On the navigation bar click Customers then click Batch invoice.
2. Enter the invoice details, for example:

   A/C	Date	N/C	Details	Net	T/C	VAT
   CLIENT01	Invoice date	4000	Work completed	200.00	T1	40.00

3. Click Save then click Close.

Although the amount you receive from your client is reduced by the value of the IR35 deduction, the receipt is posted for the full invoice amount. This ensures that your VAT Return is correct. The overstated customer receipt is offset by a bank payment posted to record the deduction.

1. On the navigation bar click Bank accounts, click the relevant bank account then click Customer receipt.
2. In Account enter the client's account code, then enter a date for the transaction.
3. Click the customer invoice then click Pay in Full.
4. Click Save then click Close.

The IR35 deduction is posted as a bank payment. This offsets the customer receipt which is posted for the full invoice value to ensure your VAT Return is correct.

1. On the navigation bar click Bank accounts.
2. On the toolbar, from the Payments drop-down click Bank Payment.
3. Enter the payment details, for example:

   Bank	Date	N/C	Details	Net	T/C	VAT
   Bank nominal code	Date of Payment	7020	IR35 deduction withheld	40.00	T9	0.00

   The bank nominal code must be the same as that used for the customer receipt.
4. Click Save then click Close.

Alternatively, if you want the IR35 deduction to appear on the customer record, you can post a sales credit using a T9 tax code, and then refund it.

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