Hello. We hired a van for a day for business use. We paid a £150 deposit, which I don’t think attracts VAT - there’s no VAT shown on the hire agreement showing the deposit payment. So that transaction shows up in our bank feed as a £150 charge, which I tagged at 0% VAT.
The actual charge for the day’s van use was £90: £75 + £15 VAT, for which I have an invoice clearly showing the VAT charged. But, because that’s covered by the £150 no-VAT deposit, I don’t have a separate bank transaction for £90 showing that I can tag at 20% VAT.
Lastly, the garage has credited us the difference, a £60 credit that shows as a transaction in our account.
How do I tag all this so that we can reclaim the VAT on the part of the £150 that attracts it?? I did wonder about manually deleting the £150 debit and the £60 credit and instead creating a transaction for the £90 one (£75+VAT). Would that work or is there a better way of doing it?
Hi Heather,
it depends a bit on the invoice you received but I wouldn’t delete the bank entries. If the invoice shows the £150 deposit, £90 (£75 + £15) charge and £60 refund? Then I would create an invoice over £150 incl. VAT (£125 + £25 VAT). Tag the £150 from your bank account to that invoice. After that, tag the £60 refund in your bank account as a credit note to the same invoice.
That should do the job.
You could also use a dummy bank account to detail every step but it is up to you.
Tanks rhc. We have spearate records for the different bits. I have a paper hire agreement, which shows the £150. Then I have an emailed invoice showing the £90, and an email from the company confirming the £60 credit. Nice and straightforward!
I’d just tag the initial £150 out as a prepayment to the supplier, then create a purchase from the VAT invoice and mark it as paid using “apply from credit”. Then the refund is just the “refund balance” option on the original payment.
This will duplicate the refund transaction on your bank account if you have a bank feed, but you can just delete the untagged one from the feed leaving the tagged one from the “refund balance”.
