Correct Accounting Procedure for Withholding Tax

flash harry

Hi

As above what's the correct procedure or entries for accounting for Withholding tax from creditors point of view.

i.e.
Invoice say 1000 + VAT 21% = 1210

Debtor pays (1210 x 65%) = 786.5

Bank 786.5; reduce debtor by same.

Debtor account left with 423.5

How do you get the 423.5 off the debtors ledger?

Thanks

smcgiff

The contra is the reduction in the tax liability.

Best to get contractor set up with a C2.

flash harry

not sure i get you?

I have xyz Ltd still appearing on aged debtors as €423.50 - how do I get this off ?

Jimmy Two Times

You will still have a debtor of € 423.50 representing the tax deducted.

Your journal is Dr Tax Withheld
Cr Debtors

dbran

Hi

Do a credit note (not a journal!!!) for the €423.50. This will update the list and the debtors control. If you do a journal here it will only update the debtors control and not the list of debtors. ie the list and control account wont agree and no-one will ever be able to work out why

Sales DR 423.50
Debtors cr 423.50

Then do a journal out of the sales into RCT creditor as this represents a refund due from revenue or a reduction int he RCT tax that you owe.

RCT Dr €423.50
Sales cr €423.50

Hope this makes sense

Kind Regards

dbran

ssbob

dbran wrote: »

Hi

Do a credit note (not a journal!!!) for the €423.50. This will update the list and the debtors control. If you do a journal here it will only update the debtors control and not the list of debtors. ie the list and control account wont agree and no-one will ever be able to work out why

Sales DR 423.50
Debtors cr 423.50

Then do a journal out of the sales into RCT creditor as this represents a refund due from revenue or a reduction int he RCT tax that you owe.

RCT Dr €423.50
Sales cr €423.50

Hope this makes sense

Kind Regards

dbran

+1 on this,

Basically you will be owed the 35% from the Revenue.

Can I ask you why you charged Vat in an RCT situation? Reason I am asking is that the Revenue introduced the reverse charge VAT system in Sept 2009(maybe 2008) that "Vat on this supply is accounted for by Principal Contractors"

J.Ryan

dbran wrote: »

Hi

Do a credit note (not a journal!!!) for the €423.50. This will update the list and the debtors control. If you do a journal here it will only update the debtors control and not the list of debtors. ie the list and control account wont agree and no-one will ever be able to work out why

Sales DR 423.50
Debtors cr 423.50

Then do a journal out of the sales into RCT creditor as this represents a refund due from revenue or a reduction int he RCT tax that you owe.

RCT Dr €423.50
Sales cr €423.50

Hope this makes sense

Kind Regards

dbran

I usually just create a bank account for Certs received and a bank account for Certs issued, I find it easier than setting VAT codes for the certs when entered as Credit notes

Galego

May I ask how you ended issuing an invoice to a customer with Irish VAT who then withheld tax on it?

I am assuming that your customer is abroad and in a country which has a double-taxation treaty with Ireland.

Only way I could see Irish VAT on that invoice and then withholding tax on it would be if the customer never provided you with a valid VAT number.

flash harry

Thanks Dbran, exactly what i was lookimg for.

Am doing this for someone else so unsure why they charged VAT etc...