Invoice help! 0% VAT & CIS on one invoice for a new build house / construction

emmgiee

Hello,

I'm new to CIS and need help with issuing an invoice - I'm REALLY struggling with it.

I work in construction industry (vat registered, ltd company) and I am issuing an invoice for works completed on a new build house with 0% VAT exemption.
The contractor and myself are both CIS registered (both on 20% deduction). The invoice I am issuing is already 0% VAT as it's a new-build exemption and the contractor is asking me to deduct additional 20% CIS from the labour part of the invoice, even though it's already a 0% VAT invoice.

If it’s a 0% VAT job and it’s a CIS invoice, does it mean there is no further CIS deduction as VAT is already 0%?
Or do I still deduct additional 20% from the labour part of the job, so it’s 0% VAT on everything and minus 20% from net labour value?


HMRC CIS telephone helpline were useless in this case, only kept saying it's a VAT issue, "not the right department" but he suggested deducting 20%. The person from HMRC VAT department said he was unsure of the answer and HMRC technical support will have to call me back with the answer... they DON'T KNOW!

The person I usually ask for accounting advice said that with the new-build 0% tax applied on our side, CIS will only need to be noted on the contractors remittance statement, and I don't have to worry about CIS in this case, as I'm not charging VAT.
Other advice I received on another forum was to "issue the invoice with 20% CIS deduction from non- materials cost, 100% materials charge and 0 VAT".


I'm so confused. I really want to get this right I simply cannot find a source which would give me straight answer.


Thank you!

Grumpy_chap

emmgiee said:

Hello,

I'm new to CIS and need help with issuing an invoice - I'm REALLY struggling with it.

I work in construction industry (vat registered, ltd company) and I am issuing an invoice for works completed on a new build house with 0% VAT exemption.
The contractor and myself are both CIS registered (both on 20% deduction). The invoice I am issuing is already 0% VAT as it's a new-build exemption and the contractor is asking me to deduct additional 20% CIS from the labour part of the invoice, even though it's already a 0% VAT invoice.

If it’s a 0% VAT job and it’s a CIS invoice, does it mean there is no further CIS deduction as VAT is already 0%?
Or do I still deduct additional 20% from the labour part of the job, so it’s 0% VAT on everything and minus 20% from net labour value?


HMRC CIS telephone helpline were useless in this case, only kept saying it's a VAT issue, "not the right department" but he suggested deducting 20%. The person from HMRC VAT department said he was unsure of the answer and HMRC technical support will have to call me back with the answer... they DON'T KNOW!

The person I usually ask for accounting advice said that with the new-build 0% tax applied on our side, CIS will only need to be noted on the contractors remittance statement, and I don't have to worry about CIS in this case, as I'm not charging VAT.
Other advice I received on another forum was to "issue the invoice with 20% CIS deduction from non- materials cost, 100% materials charge and 0 VAT".


I'm so confused. I really want to get this right I simply cannot find a source which would give me straight answer.


Thank you!

Do you have an Accountant?

VAT and CIS are not the same thing and should not be conflated.  

VAT is a tax on sales.  AIUI, you would still invoice for VAT in the normal way.  The housebuilder can sell the house without charging output VAT.  The housebuilder can still claim the input VAT that you have invoiced, hence will receive a refund once the VAT-returns are processed.  This is my understanding - if I am wholly or partially incorrect, I welcome correction from another on the forum.

CIS is a technique that HMRC came up with to ensure that supply chain contractors to the construction industry pay their income tax - the housebuilder will deduct the relevant percentage from your invoices and make that payment to the HMRC on your behalf.