Refundable Deposit

[Lurch]

I have recently paid a refundable deposit for an account with a supplier. I’m not sure how to tag this or what to do with it exactly. What do I do with the VAT on this deposit? I have a receipt for the payment but not an actual invoice.

I was thinking the easiest way to account for it would be to transfer it to a holding account specifically for deposits/bonds paid out. Will this show up in my accounts and VAT returns though?

The more I think about this the more complicated it becomes! Any advice is much appreciated.

[Joe]

@Lurch

I was thinking the easiest way to account for it would be to transfer it to a holding account specifically for deposits/bonds paid out. Will this show up in my accounts and VAT returns though?

That’s correct, create the holding account as a ‘Loan’ type account, the deposit will not show up on your VAT return and will simply be shown on the balance sheet as funds due back to the company, once the deposit is refunded, simply tag as a transfer from the Loan account. The balance on the loan account will now be £zero.

[Lurch]

Excellent. Thankyou Joe. Much easier than I was anticipating.