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VAT return not taking into account credit note VAT

Hi,

When we submitted an invoice to one of our clients, the system calculated vat on a per line basis. However our client’s system calculated vat on total value of invoice basis when making payment.

Because of way rounding worked for VAT between the two methods, we ended up being underpaid by 1p. We created a credit note for 0 pence for value and -1p for VAT to get the invoice marked as paid correctly, however when doing the VAT return, it seems that -1p VAT is not accounted for anywhere in the calculations.

Whilst value is negligible, we don’t want to fall foul of reporting errors, so were wondering how to sort this.

Hi @mos,

I am not an accountant so it may be best to double check with one before proceeding. But you should be able to make a manual adjustment on your VAT return for the 1p difference

Hi @mos

Can I just double check - are you on cash or accrual accounting for VAT?

Hi @QFMathew, cash

@QFBeth, yes I thought of that but wanted to check if it was coming quickfile was doing wrongly or something we were doing wrong.

If you haven’t been paid the value of the credit note (e.g. it was reducing the balance rather than a cash refund), then it wouldn’t be picked up on a cash accounting VAT return.

Does this mean I should put through as an adjustment when submitting return?

An accountant is likely to be best placed to advise on this, but generally speaking, if there’s no cash associated with it (e.g. you’ve just reduced the balance on the invoice), then there’s no need to make an adjustment.

On cash accounting, you would pay VAT on the cash received not the invoice value.

Ok thanks, will check with accountant.