Did a search but couldn’t find a specific example.
As part of some subcontracting I get a weekly payment invoice. So money coming to me.
This is what the invoice looks like.
I need to pay VAT on the income part but I also need to account for the commission fees and reclaim the VAT on that. The money I get is the Remittance Amount (after Deduction) straight into my business bank account.
What would be the best way to account for this please?
What I do is, I create a sales invoice over total amount (£645 incl. VAT = £49 incl. VAT + £596 incl. VAT) and tag it as a money-in payment in ‘dummy’ bank account in quickfile. Then I create a purchase invoice for the commission fee (£49 incl. VAT) and tag it as a money out transaction to the same dummy account. The dummy account should have a balance of £596 now.
The money-in transaction in the current account (£596) I tag as a transfer between accounts to the dummy account.
Then I attach the original invoice to both invoices (sales and purchases) and keep a note on both invoices as well.
Hope that’s working in your situation as well.
Do you? Do these “billed amount” values include or exclude VAT? Or is this construction industry where your main contractor handles the VAT on your sub-contracts via the reverse charge?
Not construction and the Billed amount does include the VAT the customer was charged.
Annoyingly they charge the commission based on that Gross amount. I think they should really charge the commission on the Net amount but this is how they do it.
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