Detag a payment in a previous VAT quarter

[exclusiveassets]

I am wanting to credit a couple of invoices from March/April but to do this I would like to Detag the payments first as they were tagged incorrectly. Unfortunately it is in a previous VAT quarter and will not allow a detag. Is this possible or is there another way to do this ?

[QFMathew]

Hi @exclusiveassets

It sounds like you’re on cash accounting for VAT, which means that unfortunately you’re not able to detag the transactions as they’ve been reconciled to a VAT return.

Would you be able to give us a few more details about your situation, please (e.g. how were they tagged incorrectly - was is the wrong invoice, or more of incorrect amounts)?

[exclusiveassets]

Hi Payments received for a customer have been allocated against the oldest invoices as they are all the same amounts. Unfortunately we have just found out that no hire charges should have been raised for two weeks (inv 221 & 227), we wanted to detag to ensure the correct payments were registered to the correct invoices. therefore keeping the ledger correct for papertrails etc.

[QFSteve]

Hello @exclusiveassets

When transactions are vat locked, It is recommended that the transactions are reversed and re entered correctly. That way the reversal and the new transactions are picked up on the vat return.

For example

An invoice for £100 +vat is entered, paid and included in a return

To reverse this

• Credit the invoice and refund the payment using the same dates
• Copy the invoice and amend it so it is correct and pay it off (e.g. 80+vat)
• If the actual payment was for £100+vat you can allocate a second payment to the customers account for the difference as a prepayment

The credit reverses the original invoice.
The refund reverses the original payment.
The re entries keep your ledgers and bank correct
The transactions in the next vat return will correct the figures HMRC hold.