I have a situation whereby I would like to write off a purchase invoice regarded as outstanding. The scenario is a bit complicated so I’ll explain with a simple example.
Purchase Invoice = £10,000 + VAT £2,000 = £12,000
Invoice paid in full.
As delivery deadline wasn’t achieved by supplier so a full refund could be demanded.
Full refund received net of VAT = £10,000.
I assume supplier had already declared and passed on the £2,000 VAT amount to the VAT tax office.
Then when I queried the £2,000 the supplier went into administration.
So in quickfile the invoice is regarded as outstanding = £12,000 - £10,000 (Credit Note) = £2,000
How do I write-off/void this invoice because it’s not really outstanding?
If you go into the preview screen for the purchase invoice in question, then click the “More Options” menu there should be an option there to “Credit Note”
The Credit Note should then default to the remaining balance on the invoice. Can you let me know if that works?
I see that allows me to create another credit note but doesn’t that mean I’ll be left with a credit note which will stay outstanding forever? I want to somehow write off/void the invoice it so it can be forgotten about and not have purchase invoice or credit note showing as outstanding. .
One thing I should have shown in my sample was that the initial Purchase Invoice had only been partially paid. The balance was to be paid to supplier on delivery of goods but it was never delivered so a refund was requested and (partially) received. So in sample:
Purchase Invoice £10,000 + VAT £2,000 = £12,000
Paid £7,500 (75% upfront) + full VAT £2,000 = £9,500
The balance or £2,500 (25%) was due on date goods delivered.
However, no goods delivered so refund of what’s been paid requested.
Refund amount received = £7,500
So Purchase Invoice shows in QF as £4,500 outstanding.
We refer to it as a credit note, but it’s effectively a VOID on the balance. It doesn’t remain outstanding it just cancels the balance on the original invoice.
One credit note as “refund payments already made”, for £7,500 NET, no VAT, which will generate a £7,500 “money in” on the relevant bank account (delete any duplicate transactions)
Another credit note for “reduce unpaid balance”, for £2,500, again with no VAT, which will cancel out the remaining outstanding on the purchase.
That should balance everything up, taking the whole £10,000 back out of your P&L, and you’ll get the £2,000 VAT back from HMRC on your next VAT return if you haven’t claimed it already.
Note: I am not an accountant - run it past yours if you want to be sure
I tried what you said whereby I created 2 credit notes, 1 for £7,500 and 1 for £2,500 but it leaves me with Purchase Invoice having an outstanding amount of £2,000 which is the VAT element of the Purchase Invoice that I paid.
That shouldn’t be the case - the £2,500 “reduce unpaid balance” effectively leaves the original invoice at £7,500 net plus £2,000 VAT, which is what you paid. The other £7,500 credit note accounts for the net refund, leaving you with £2,000 VAT-only which you actually paid (and will get back from HMRC).
I’ve managed to get the outstanding purchase invoice amount back to zero. I’ve also raised a sales invoice for the interest I received on top of the refund from supplier. Hope I’m making sense. Anyway, the invoice is no longer outstanding which is what i wanted.
