Filed my VAT return but notice balance on Sales Tax Control Account which is the same as the total of credit notes issued. Checked detailed VAT Return and can’t see the credit notes at all! Why haven’t they been included?
Are you on cash accounting by any chance? If so then that’s how it’s supposed to work - the VAT is accounted for at the point where the money changes hands.
When your customer paid you you accounted for VAT on the amount they paid. When you raised the credit note no money changed hands, you’ve just held the previous payment on account for future use so you don’t get any VAT “back”. But conversely when you do later apply the credit to another invoice and the customer pays the difference, you’re only liable for VAT on that difference, not on the whole invoice total.
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