I’ve got a really complicated situation, in my eyes, and I haven’t got a clue how to tag this bank statement line. I’ve changed and rounded the amounts for simplicity but my details are as follows:
I have imported a single bank statement line with a large amount received from my Solicitor.
Bank Statement line: From Solicitor: Credit £20,700
This amount received consists of the following:
Compensation won for negligence against another solicitor: £25,000
Refund from solicitor of my earlier prepayment/proforma payment which was never allocated: £500
MINUS
Fees for services of solicitor in this case (NET): £4,000
Fees for services of solicitor in this case (VAT): £800
The original prepayment/proforma payment which I paid a few months back is tagged as a prepayment and not allocated to any invoice.
If anyone can give me guidance how I can tag this £20,700 bank statement credit I would be very grateful and indeed impressed!
I would treat your solicitor as a merchant or holding account in their own right. I have a spare bank account called “mixed payments” that I use in situations like this.
If your original £500 payment isn’t already locked (by a vat return or similar) then I’d delete that and re-tag the bank payment as a transfer to the mixed payments account - if it is already locked then go into the payment record for the (presumably) unallocated payment and “refund balance” to the merchant account.
Now you can do a normal purchase of £4,000+VAT for the legal fees (paid in full from the merchant account), and create a new transaction of £25,000 money in to tag as something not on the list to a suitable place (ask your accountant where is suitable - presumably a new income nominal but I’d definitely double check). This should leave an overall balance of £20,700 on the merchant account, then the money in to your current account is simply a bank transfer from there to return the balance to zero.
No I haven’t created any invoices for the fees or credit note for the credits. I wasn’t sure whether to create these manually or auto generate them somehow.
Do I create a Credit Note for the Compensation pay out?
I can manually create a invoice for £4,800 for the Solicitor fees.
There is no invoice for the prepayment amount £500 which is not allocated. How do I create a Credit Note for the prepayment amount when there is no invoice to credit?
I’ve done a couple of VAT return since these transactions so I suppose the £500 is locked now.
I see now I can ‘Refund balance’ for the unallocated prepayment amount of £500.
Then I can manually create a purchase invoice for £4,000 + VAT for legal fees.
Then somehow create a transaction “not on list” for the £25,000 compensation and post to a nominal account to be decided. This last step, I’m not sure how to do manually, other than via the ‘Tag Me’ button but that will tag the £20,700 statement line amount won’t it?. Is there a way I can manually create this “not on list” type transaction and then I tag the line £20,700 to the combination of transactions (if I can remember how to do it)?
I mean in the “merchant” bank account, click the “new transaction” button at the top and manually create a £25,000 money in transaction there. This will be created with a red “tag me” button the same as with transactions that come from a bank feed.