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I'm in need of a little help from accounting types please.
I'm a sole trader who has just registered for VAT. I have a contracting gig for a local shop who stop tax at source, 20% on the invoice amount. I believe this isn't strictly correct as they should only stop on the labour, not the materials too but as materials are minimal usually I let this slide and just adjust it at year end when claiming expenses. However, this invoice they've stopped 20% on the VAT portion of the bill, is this correct or should they have stopped only on the portion before VAT?
I've searched the web but my google foo is weak today so asking the all seeing forum instead! Thanks in advance for any help.
Read CIS340
Deduction of CIS tax is not applicable to materials or VAT element.
They are incorrect. Refer them to the above guidance specifically point 2.39 of the 81 page booklet.
The deduction does not apply to any part of a payment that is for
the cost of the following:
• materials
• Value Added Tax (VAT)
As I thought! Thanks.