I’d be grateful for advice please
We use Cash Accounting and Domestic Reverse Charge for CIS invoices for VAT. I issue invoices for the full amount for this particular customer inclusive of CIS and they normally deduct the CIS element before making the payment. However this customer should have paid £2,520 after deducting £630 CIS, mistakenly paid the full £3,150. The £630 will be refunded but not until after the closing date of the VAT return, ie 31 July. QuickFile has allocated £2,520 to the invoice and left £630 unallocated, but the £630 is now showing in Box 6 of the VAT return with £105.00 sales VAT appearing due. As this is an overpayment and not consideration for a supply, how should this be recorded so Box 6 and the related sales tax is not overstated and also correctly shows on the customer’s account?
Thank you in advance
I doubt it’ll be possible to achieve both of these at once, the closest you’ll get is probably:
- untag the original bank (over) payment
- tag it again as payment from a customer, pay down multiple invoices, select the client but don’t assign to any invoices - this should make it a prepayment and you’ll be prompted to select a vat rate to assume for the unallocated amount, select 0%
- go to the invoice, log payment, apply from credit
At this point your VAT return will show the whole value of the payment in box 6 but only treat the portion assigned to the invoice as 20% VAT. The unassigned portion will count in box 6 but not in box 1, so you won’t owe any VAT on it, and when you do the refund in the next quarter your subsequent return will subtract the overpayment from box 6 so the overall total across both returns is correct.
Thank you, that worked a treat!
With kind regards,
Mary