We have a client who has been overpaid by a tenant (paid the same invoice twice) , there is though ongoing quarterly rent, does this overpayment need to be accounted for on this quarters vat return, its not a sale as its not our clients money, what is it?
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If it's not commercial rent then there can't be any VAT implications. Currently it's a creditor.
If it's not commercial rent then there can't be any VAT implications. Currently it's a creditor.
Creditor ? On a cash accounting scheme ?
I'd say if there's an express or implied agreement to set it against the next supply, VAT should be paid at the date of receipt.
It's probably trivial and will have been corrected by the time the next VAT busybody comes along so I wouldn't bother about it too much. But I'd suggest that retention, as opposed to repayment, implies an implied agreement at least.
Personally, I'd cheerfully pay the VAT if it meant I didn't have to collect on the next invoice.
Yes its commercial warehouse letting, theres no agreement to offset against a following invoice.
So why is the money being retained ?
Either send it back or risk being caught in that implied agreement.
Just because he's on cash accounting for VAT doesn't alter the fact that it's a creditor.
Just because he's on cash accounting for VAT doesn't alter the fact that it's a creditor.
Sure - but creditors have no relevance on cash accounting.
You would only account for output tax if you allocate the overpayment against future rent.