Purchase Invoice Entry

Purchase Invoice Entry

When entering a purchase invoice for a supplier is flagged as a ‘subcontractor’ the system will automatically;

Create a purchase credit for a configured percentage of the invoiced amount for the purposes of tax. The percentage is based on the rate selected for the supplier account and the rate percentage consigured on the Subcontractor CIS Settings screen.
If an override tax code is selected on the module settings screen this will be used (instead of the supplier default tax code) when generating the CIS purchase credit note.
If configured a nominal journal will be generated using the nominal account codes defined on the Subcontractor CIS Settings screen.

Nominal Account Postings

When a Purchase Invoice is entered the following nominal accounts will have values posted against them;

A credit will be posted to the Nominal Ledger Creditors Control account.

Plus either;

If the user manually amends the nominal account postings a debit will be posted to each account selected.
If nominal accounts are not amended the system will post a debit to the supplier’s default nominal account (selected on the supplier account maintenance screen).

Any resulting subcontractor CIS Purchase Credit will result in the following nominal postings;

A debit will be posted to the Nominal Ledger Creditors Control Account.

Plus either;

If an ‘override nominal control account’ is specified against the CIS rate a credit will be posted to this account.
If no ‘override nominal control account’ is specified against the CIS rate a credit will be posted to the supplier’s default nominal account.

For Example ...

The supplier (SIM001) has been configured as a sub-contractor with a CIS rate of 20%.

The nominal account 44101 / ADM / SAL is configured as a 'labour' nominal account.

The materials account 44100 / SAL /ADM is not configured as a 'labour' account.

Purchase Invoice Entry 1

When the purchase invoice is saved a CIS credit note will be automatically generated for 20% (the subcontractor CIS rate) of the total labour goods value (£400 in this case).

So in this case a credit note with a value of £80 will be automatically added to the supplier account.

Purchase Invoice Entry 2

Purchase Invoice Enquiry 1

Note: If no 'labour' nominal accounts had been setup/configured (on the CIS configuration settings screen) the CIS credit note would have been generated with a value of £100 (i.e. 20% of the total purchase invoice value, £500).

Net/Gross Calculation Issue:

When CIS and Tax Rates are the same it can appear that this module has incorrectly applied CIS to the Purchase Invoice gross value. This will not be the case; the module will have calculated CIS based on the net amount with tax then being applied at the tax (CIS) rate. When this occurs the issue is resolved by selecting a zero/exempt tax code in the configuration settings 'Override credit notes to use tax code' option.

Software

Hardware & Networks

Sicon Products

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