Discover the Cis Invoice Example for Retail Trade that Streamlines Your Business Processes

Cis invoice example for Retail Trade

hello and welcome to this video if you deal with science at all within your business this video is for you big changes are coming from the 1st of march so we want to make sure that you're prepared for it you know exactly what to expect and how to deal with it in your accounting system now if you're using quickbooks by any chance once you've watched this video head over to our sister channel aaron patrick the quickbooks chat and we'll go through step by step on some real useful features of how to make sure you're accounting for cis correctly for now stay tuned to this one and we're going to make sure you understand everything there is to know about the new cis changes stay tuned [Music] hello and welcome to this video my name is aaron patrick i'm a chartered accountant certified uk trainer from intuit and also that quickbooks chat on the internet now a head of account here we've been preparing for the new changes to cis and how that can affect your business so let's dive straight into it and understand exactly what's going on so look well basically we don't got long from the 1st of march 2021 the domestic vat charge must be used for most supplies of construction industry service the charge applies to standard and reduced rate services for individuals who are businesses who have registered that reporter in the constructed industry scheme how to prepare well in a nutshell we don't have long at all from the 1st of march 2021 the domestic vat reverse charge must be used for most suppliers of building and construction services the charge applies to standard and reduced rate vat services for individuals who businesses who are registered for the vat in the uk are reported within the construction industry scheme how do you prepare you'll need to first of all make sure your accounting system and software can deal with the reverse charge consider whether the charge will impact your cash flow and make sure all staff are responsible for that accounting are familiar with the reverse charge and how it work so that's a lot to take in but effectively what we've got to understand is that hmrc are changing the way we account for cis and v80 on top of it so at the moment if you're a vat registered company and you're also in the cis then you would have to add on the v80 and then you'd also have to account for cia separately currently if you're cis and have bat then when you create an invoice you have to put the v80 on top just like every other business out there but now we're going to have to account for it differently now with reverse charge that means instead of actually putting v80 on top of our services we're going to use the reverse charge mechanism so that we don't have to add v80 on as i've just said what that will mean is that we're going to have an issue with cash flow because if you think about it if you're not charging that extra 20 on top that's 20 less you're going to have coming into your bank each and every month so you just need to be prepared for it and be ready for it and we need to make sure as well is that your staff as well as your accounting software are ready for these changes so you need to make sure that you understand what the changes are how they account for them now as i said before if you're looking to do this on quickbooks online head over to our other channel or use the link here and we'll make sure that you understand exactly how to account for it in the new update okay so that's if you're a customer what about if you get some reverse charge though what about if you receive an invoice and you need to account for it well there's changes there as well let's have a look so what if you're a customer you must use the reverse charge from the 1st of march 2021 if you're that rich in the uk supply building construction industry services and your company is registered for v80 in the uk payment for supply is reported within the cis scheme well in a nutshell you are going to be given a invoice that you need to account for now before you account for it you need to make sure that they should have applied the ice reverse charge first so to do that here's how you do it if there was all traded you need the name the utr you need tax prepayment reference national insurance number after a partnership you're also going to need to know the partner's number utr number if they're a company you need the name of the company company unique taxpayer reference company registration number and then you'll have everything you need so once you've got that information you can actually put the checks in place to make sure that they are on the cis scheme and they were able to apply that reverse chart on the invoice itself as well we should have confirmation on there that the reverse charge has been used and the key thing to notice that there won't be any vat on that invoice so how do you account for it once you've confirmed your accounting system and software can record the reverse charge at that point you'll be good to go now there are some confusion that comes around with this and one of them is the following is there a minimum threshold from which the vat reverse charge for construction should apply well no there is no maximum threshold at all there's a thing called the five percent disregard the vat reverse charge says that certain work on taken by subcontract must have the reverse charge applied if the work falls under the cis a general list of the work that does fall under the cis and the work that doesn't can be found on the government website this is true if the subcontractor invoices for a mixture of work so called mixed invoices in this case the va reverse charge should be used but there's an important exception if the component of the work of the invoice for the work that falls under the tires without reverse charge force is just five percent or less of the total amount of the voles and the cis reverse charge isn't used for example installing the security system does not fall under serious reverse charge rules installing lighting does so if an electrician were to visit a site to wire a security system and also took care of some lightning while there and the latter work represented five percent or less the invoice amount then the cis reverse charge should not be applied to the entire invoice but if the lighting wiring work was 10 for example then the vat reversed charges will be applied to the entire invoice conclusion on the vat reverse charge if you have projects that end after the 1st march 2021 and include construction services likely the that the charges to that reverse charge invoicing will apply in any event you should attempt to become familiar now with what it is and isn't included on the reverse charge and can communicate with any contractors who regularly use you to ensure that you understand the requirement a contractor you might want to contract your regular subcontractors and discuss the matter with them of course the reverse charge might have to be stated in the contracts that's drawn up and you will also need to ensure your it systems are prepared fully such as ensuring your accountant sisters is able to process reverse charge your invoices for further advice on how to proceed with that reverse charge consult to a vat specialist or speak directly with hmrc so in a nutshell you won't be charging v80 for any vat services you do under the cis scheme going forward but that doesn't mean you don't have to account for it at all you need to apply what's called the reverse charge also if you're accounting for these invoices that come in with the reverse charge on them then what you need to be able to make sure is that you account for them correctly you need to make sure your software is updated ingly and you use the reverse charge mechanism because the v18 must still be accounted for just because you've not been charged with b8 doesn't mean that you don't have to include it it's actually more important for you to recognize that it's a reverse charge and make sure it's included on your vat return correctly the way we do this is we make sure that they're in both of the boxes for input and output therefore you have to pay over zero but you're still accounting for it correctly and it's crucial that we get this bit right so going forward make sure that the cis is being accounted for so going forward if you do have any involvement with cis and v80 make sure you're aware of these changes from the first of march 2021 and then make sure that your software can deal with them to make sure you're being compliant hopefully that's helped you hopefully you can understand exactly where we're coming from here again make sure you jump over to our sister channel aaron patrick the quickbooks chat so you can make sure that you're accounting for it correctly in quickbooks online my name has been aaron patrick it's been absolutely pleasure to do this video for you don't forget if there's been any use to you whatsoever don't forget to like and subscribe to the channel put some comments in below if you're looking to move over to the reverse charge and if you've got any issues with it so far and as always it's been an absolute pleasure to do this video for you and i'll see you in the next video bye for now