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CIS 20% tax deduction from total rather than adding 20% to total

zekeb007zekeb007 Member Posts: 6

Please someone explain how I can create an invoice to have the 20% CIS TAX deducted from the Labour TOTAL rather than 20% being added

in Sales & Invoicing Technical Support

Comments

  • davidwhite136davidwhite136 Member Posts: 2

    hi zekeb007 did you find a solution as I'm having the same issue

  • zekeb007zekeb007 Member Posts: 6
    No apart from you, I was surprised when I got a response from you. Please let me know if you find a resolution,
  • AlexLAlexL Member Posts: 2,869 ✭✭✭

    Hi @davidwhite136 @zekeb007 . Can you explain to me the use case or your work flow as to why you would want the tax to be deducted from the total amount being charged?

  • davidwhite136davidwhite136 Member Posts: 2
    Hi alexlewiszarkos I work in the construction industry (cis) and my tax is deducted from source.
    It would be handy to invoice with the tax removed
  • zekeb007zekeb007 Member Posts: 6
    I too need to be able to invoice the NET AMOUNT showing 20% CIS TAX taken out in the Total Amount box.
    Is this option available please ?
  • CharlotteCharlotte Member Posts: 671 admin

    Hi @davidwhite136 @zekeb007 thanks for your patience. I've been working through this with my team this morning and on the advice of our Product Manager who is most experienced with the ins-and-outs of tax regulations in the UK, I'm going to recommend talking to an accountant or bookkeeper in your region. (One of our members might be able to help.) There isn't a feature in Wave that is specifically suited to this requirement. Given the tax implications, risk of penalty, and so on, I don't want to advise a workaround that could create problems for you in the long run. I'm sorry for the time it took to get you a response. If we can help with anything else, please don't hesitate to ask.

  • masoncarpentrymasoncarpentry Member Posts: 1
    Hi there
    I have just joined and now realise that there is no ability for CIS tax deduction at source.
    This is a requirement for all sub contractors in the uk construction industry.
    To say “go and see an accountant “ is a major cop out and unhelpful as we are trying to take control of our finances away from the likes of that.
    All it would need is the ability to add a minus sign in front of the tax option much as I have done in xero for two years now. Quick books also has this option.
  • zekeb007zekeb007 Member Posts: 6
    Well said Masoncarpentry,
    I agree a simple change to a minus (-) sign in their algorithm would help out immensely.
    Saying they could be liable for tax implications is absurd, it’s more likely for us to get our invoice totals wrong with the way things are currently with only having the including tax option and not being able to have after tax total option at all.

    Rather annoying for us who want an easy CIS compatible invoice template, WAVE admin should take our requirements a bit more seriously if they want to be considered suitably adequate, conscientious global leaders in accounting software.
  • AlexLAlexL Member Posts: 2,869 ✭✭✭

    Hi @masoncarpentry . Thanks for your input and feedback on this. It's valuable for us to know exactly how this applies to your business - and in this case the UK construction industry - as it provides us with more insight into adding this feature and how it would help. With this being said, I can't guarantee that this feature will be implemented, but your suggestion of adding a minus in front of the tax option would definitely be a great solution for it. I'll pass your feedback along to the team.

  • zekeb007zekeb007 Member Posts: 6
    Awesome, many thanks for the acknowledgment of how important this feature would be to us in the UK l, invoicing CIS 20% Net amounts
  • SpaceartSpaceart Member Posts: 3

    HI,
    I m yet another UK Construction industry member who would love to see this ' minus' option,
    At this moment I need to shift to Quickbooks to be able to rise CIS invoices!

  • zekeb007zekeb007 Member Posts: 6
    Great the more UK based CIS operatives whom raise this massive issue the better, thanks and hope for our sake it gets remedied ASAP
  • SpaceartSpaceart Member Posts: 3

    I dont think they care though,still not enough voices I suppose!!!

  • ZoeCZoeC Member Posts: 388 admin

    Hey @Spaceart , we definitely do care! Your feedback is valued and not going unnoticed.

  • SpaceartSpaceart Member Posts: 3

    Well Zoe,talk is cheap...
    Why then nothing has been done from 29 of January where the issue was raised first?
    Its more than 4 months now...

  • ExpertPExpertP Member Posts: 2

    As I mentioned in another similar thread, we need the ability to create a new tax ourselves in the negative (it would essentially be minus 20% as opposed to plus 20%)

  • Robin59Robin59 Member Posts: 6

    I would think a simple minus (-) figure in their algorithms would also be helpful when adding a prompt payment discount/early settlement discount to the invoice which I cannot find a way to do?

    Possible requires a new thread/topic...

  • MerlinAccounts_UKMerlinAccounts_UK Member Posts: 177 ✭✭✭

    The CIS deduction isn't an actual deduction from your invoice value but rather a deduction from the amount being paid to you in settlement of your invoice. You should not therefore be trying to tweak your invoices to show this. What you need to do is match the payment received against your invoice, leaving a 20% balance outstanding. Then, using (for example) the cash account, enter the CIS tax first as if it is a payment for your invoice, and then entering a payment in your cash account and allocate that to your Balance Sheet under perhaps Current Assets with a new heading called CIS deductions. If you are offsetting against PAYE deductions/CIS deductions made by you from staff/sub-contractors you should put it under liabilities with your PAYE deductions so that it naturally offsets against these.

  • DedricDedric Member Posts: 52 ✭✭

    Similar system exist in Spain: it's not called CIS, and is not limited to the construction industry.

    Here, we have IRPF, which is a retention. (it has a negative percentage)

    So for instance, when you rent an office, say the agree rent is 1000€.

    The invoice should be as:

    Rent = 1000 €

Base: 1000€
+ VAT (21%):  +210€
- IRPF (19%): -190€

Total: 1020€

    First, when creating a new [sale] tax, it is not allowed to enter a negative %. So that doesn't work.

    Then I've tried to create a sales product/item called retention, entered manually the amount (-190€), but then the minus sign doesn't appear on the invoice!! Instead, it shows: (190€)!!!

    Help please!

  • MerlinAccounts_UKMerlinAccounts_UK Member Posts: 177 ✭✭✭

    @Dedric

    CIS tax isn't actually a retention. CIS tax is an amount that a contractor deducts when paying the sub-contractors invoice and which has to be paid over to HMRC by the contractor. The sub-contractor doesn't (shouldn't) raise an invoice for earnings less CIS tax, but for earnings only - they are not required to self deduct the tax.

    With regard to your illustration, are you saying that in Spain the landlord is required to deduct the tax on the actual invoice before giving the bill to the tenant? So the tenant only pays a net of tax rental fee?

  • DedricDedric Member Posts: 52 ✭✭

    yes indeed.

    The invoice must show:
    base price
    vat amount
    IRPF (retention) amount.

    The amount due to be paid is then:
    base+vat-irpf

    Then the tenant, at the end of each quarter, has to pay all IRPF amounts to the tax authorities "on behalf of the landlord".

  • DedricDedric Member Posts: 52 ✭✭

    same principle applies for employers paying a salary to their employee.
    They deduct a retention and pay it to the tax authorities at the end of each quarter "on behalf of the employee".

  • MerlinAccounts_UKMerlinAccounts_UK Member Posts: 177 ✭✭✭
    That's different though. An employer is obliged to deduct employment taxes from an employees gross pay and then remit those deductions to the tax authorities (usually monthly). It's not the employee that remits the deductions as they've already been taken from him by the employer.

    That was useful to know about the Spanish system, I knew tenants had to stop the tax before paying to their rent but didn't realise the landlord had to advise of the amount on their charges, so thanks for that.
  • DedricDedric Member Posts: 52 ✭✭

    @MerlinAccounts_UK said:
    That's different though. An employer is obliged to deduct employment taxes from an employees gross pay and then remit those deductions to the tax authorities (usually monthly). It's not the employee that remits the deductions as they've already been taken from him by the employer.

    That was useful to know about the Spanish system, I knew tenants had to stop the tax before paying to their rent but didn't realise the landlord had to advise of the amount on their charges, so thanks for that.

    Basically, in both cases (employer-employee & landlord-tenant), both documents (pay slip or invoice) have to show all amounts, so it clearly states how much retention is "taken" out of the final number.

  • AndrewMcCAndrewMcC Member Posts: 2

    @Dedric said:

    @MerlinAccounts_UK said:
    That's different though. An employer is obliged to deduct employment taxes from an employees gross pay and then remit those deductions to the tax authorities (usually monthly). It's not the employee that remits the deductions as they've already been taken from him by the employer.

    That was useful to know about the Spanish system, I knew tenants had to stop the tax before paying to their rent but didn't realise the landlord had to advise of the amount on their charges, so thanks for that.

    Basically, in both cases (employer-employee & landlord-tenant), both documents (pay slip or invoice) have to show all amounts, so it clearly states how much retention is "taken" out of the final number.

    Just to reiterate what @Dedric is saying: this is 100% required on all invoices in Spain. It is not an aesthetic choice or convenience on the part of the party submitting the invoice or sales receipt. Not having this feature makes Wave entirely useless for billing in Spain.

    [Edited to add a link to a table of Withholding Tax around the world: http://taxsummaries.pwc.com/ID/Withholding-tax-(WHT)-rates ]

    edited February 7, 2020
  • EmmaPEmmaP Member Posts: 639 ✭✭✭

    Hey @AndrewMcC! Thanks for reaching out. I can see how this negative tax has an impact on users from Spain who are wanting to use Wave. Because Wave is free to use worldwide it is difficult to keep up with standards set by each country when it comes to accounting and invoicing, but we do want everyone to be able to use Wave so I hope this is something we are able to resolve in the future.

  • MacMac Member Posts: 1

    Hi. I'm a small business owner in UK and also need to use a tax deductions on my invoice. Does anyone figured out how to do it in WAVE App?

  • ConnorMConnorM Member Posts: 1,229 ✭✭✭

    Hey @Mac. Unfortunately, we do not have percentage-based deductions supported within our invoicing platform at present.

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