Cash accounting and vat

Cash accounting and vat

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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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By NicoleM
06th May 2020 10:45

unless you refund ...

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By CW2012
06th May 2020 10:49

That was my first consideration but ignoring that for now, what is the basis of the underlying cash accounting, this money isnt a sale and as you point out it should go back to the tenant, before it is repaid should vat be accounted for, it doesnt seem to be a vatable transaction, am I missing something.

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By 356B
06th May 2020 11:27

If it's not commercial rent then there can't be any VAT implications. Currently it's a creditor.

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Replying to 356B:
RLI
By lionofludesch
06th May 2020 12:27

356B wrote:

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.

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Replying to lionofludesch:
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By CW2012
06th May 2020 12:42

Yes its commercial warehouse letting, theres no agreement to offset against a following invoice.

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By lionofludesch
06th May 2020 12:52

CW2012 wrote:

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.

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Replying to lionofludesch:
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By 356B
06th May 2020 14:08

Just because he's on cash accounting for VAT doesn't alter the fact that it's a creditor.

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By lionofludesch
06th May 2020 14:13

356B wrote:

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.

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Replying to lionofludesch:
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By 356B
06th May 2020 15:04

OP asked"its not a sale as its not our clients money, what is it?"
I answered.

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Replying to 356B:
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By lionofludesch
06th May 2020 15:12

356B wrote:

OP asked"its not a sale as its not our clients money, what is it?"
I answered.

[sigh]

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chips_at_mattersey
By Les Howard
06th May 2020 14:09

You would only account for output tax if you allocate the overpayment against future rent.

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By CW2012
06th May 2020 14:12

Thanks for the answers, I agree that it should go back to the tenant lest it become an implied rent payment but for now at least the vat side of things is clear.

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