customer deposit receipts over year end ?

receipts for cancelled projects

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Sorry, I'm having a senior moment here.

earlier in 2020 (dare I even say that word!) we took some deposit payments for event bookings that were subsequently cancelled due to the covid situation. Not huge amounts but about £10k over a few clients. At the time the events were continually put back as the year went on, but they have all asked us to hold onto the cash pending possibly re booking this year. We agreed not to charge any cancellation fees as all this mess was out of their, and ours, control.

No vat invoices have been raised as yet, these would usually have been raised when the project was completed

The receipts are currently shown on each customers account, in our debtors ledger, as unallocated cash. Should we just leave the deposits as they are, on their account over our year end, its a possibility that no events will go ahead this year inwhich case the funds will be returned.


Replies (5)

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By paul.benny
07th Jan 2021 13:36

I'd reallocate the total to creditors in your financial statements. No harm in leaving the individual balances on each debtor account.

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By tom123
07th Jan 2021 13:47

Surely you have a tax point, being the earlier of receipt of cash and invoice date.

So I think invoices should be raised, and I don't quite get how people were prepared without one.

Revenue should be deferred.

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By Jason Croke
07th Jan 2021 14:22

Agree with Tom123, receipt of a deposit for a future event creates a tax point at time deposit is received.

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By ohwhatnow
07th Jan 2021 14:38

ok, so an invoice raised in 2020 - income deferred to 2021?
then presumably if confirmed that no event will be happening this year, then credit note issued (effectively negating any vat) and funds repaid?

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Replying to ohwhatnow:
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By tom123
07th Jan 2021 14:43

That sounds about right!

Incidentally, we are waiting to see if a big trade show will take place.

Was postponed a couple of times in 2020, think they are missing the whole of 2021 out and having a go in 2022.

Hopefully - because our deposit as exhibitor is quite big.

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