We have a Hotel Suppliers where we pay a deposit without VAT prior to an event. When the invoice is sent to us later on the balance is paid which includes all the VAT for the total invoice. When the Deposit is paid on the bank statement I have tagged this and created a new invoice without VAT. Now the final invoice has arrived for the full amount for VAT. So if I create an invoice from this for the full amount I cannot pay down the initial deposit as it has already been done in a previous accounting period (our accounting period end 31st Oct 2013 and the deposit was paid in Oct. The final invoice is in November so it misses the end of year accounts but not the VAT period. How can I enter the invoice with the full amount of VAT to be reclaimed?
This initial deposit should be entered as a pre-payment rather than tagged to an invoice. When tagging this on the bank select, select the option to ‘Pay down multiple purchases or assign to a supplier account’.
The credit will then sit on the supplier account and when the invoice comes through you can enter it with the VAT and use the credit to pay it down.
Thank you I now understand. It was more simple than I thought it was. Great service as usual.
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