Monthly draw downs against invoice

Continuing the discussion from Draw downs versus creating new invoice:


Following on from this. I have entered an invoice from a Supplier who I will be paying on a monthly basis. On the advice of my Accountant I have entered the invoice total without VAT so that I do not claim all of it back in one month and tag each monthly payment against this invoice. However the monthly payment does not show on the VAT returns as having paid VAT. How do I ensure that I am claiming the VAT paid and tagging it correctly?

If you pay down an invoice that has zero VAT and you’re on cash accounting then the payment will be deemed to have no VAT. This is not the correct way to do it. You should put 20% VAT on the invoice and your return will only register VAT when payments are received as you’re on cash accounting.

I have changed the invoice to include the VAT and when I do my VAT return report I see the VAT. I have de-tagged and re-tagged the £18.00 payment to the invoice but it does not show up at all in the VAT report. I do not want to claim back the VAT on the full invoice only on the monthly payment. Anything else I can do?

In your VAT Settings you’re on the Accrual method so it will take the full VAT of the invoice rather than the payments. It’s unlikely you’re on accrual VAT, check with your accountant as it’s more likely to be cash accounting, that way VAT is calculated against payments only.

Thank you I will check with them.

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