We originally charged VAT to a client on a project that should have been zero VAT rated and all our invoices were paid including VAT, many months ago. Out client has recently tried to claim the VAT back from HMRC who said it would have to come from us by way of an adjustment to our current return period, which is fine.
The way we have dealt with this in QuickFile is to have re-credited all the original invoices, creating credit notes for each one, allocating the money to the client account as prepayments. We then created a new set of invoices and paid them from the client account. This has left the client account in credit for the exact amount of VAT paid. We have paid this back to the client from our bank account.
My question is how do I tag this bank transaction? I can’t find an option to tag the transaction to the prepayment amount it matches for my client, and can’t find an appropriate way to do it.
When I view this client’s payments, I can see there are two credit notes that contain unallocated amounts that together add up to the total figure I need to tag the payment to. If I refund these to the client it creates 2 manual bank transactions,- I can’t see a way to allocate both of these to a single bank transaction that’s already happened…
The way to refund a prepayment would be to view the client, go to View >> All Payments and do a search for payments that are Unallocated. If you view the details of these, you’ll have an option to refund the balance.
However, this would have to be individually for each payment.
As I said in my post, I have already made the actual payment to the client and the transaction has come through via our bank feed. If I refund these to the client as you say, it creates 2 manual bank transactions - I can’t see a way to allocate both of these to a single bank transaction that’s already happened… What I need to do is tag this bank transaction to the client account rather than creating two new ones. If i create two new ones it throws my bank balance out!
It’s not possible to tag an existing transaction as a refund of the prepayment. You would need to do the steps I outlined above and delete the two in the bank statement already (the ones from the feed). That would remove the duplication too.
If needed, you can update the transaction description to match your statement.
If you’d prefer to keep your statement as is and matching the bank, you could create a “holding account”, refund the prepayments to here, and tag the existing transactions as transfers from the holding account.