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Should a client in the Construction Industry Scheme (‘CIS’) calculate VAT before or after taking off the CIS deduction?

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  • Publish date: 01 December 2015
  • Archived on: 01 December 2016

Q: Where my client is in the Construction Industry Scheme (‘CIS’) do they calculate the VAT after taking off the CIS deduction, or before?

A: The VAT is calculated on the gross, CIS-inclusive amount on the basis that the requirement to deduct the CIS tax does not affect the consideration being charged for VAT purposes. HMRC guidance on the CIS is quite clear that in order to work out the CIS deduction, you must first take off the VAT amount meaning that the VAT amount is not impacted by any CIS deduction. HMRC guidance is here http://www.hmrc.gov.uk/manuals/cisrmanual/CISR15100.htm