Bit bored. Can't 'quickly' find any guidance on this one.
How is furlough treated in accounts? I use Liberty for our small charity accounts and we got furlough receipt yesterday (HURRAH!).
Initially Liberty said it was credit bank, then debit debtors for the pay. When receipt arrives it's debit bank and credit debtors.
Now they say that's wrong and HMRC have 'clarified' it is credit bank, debit P&L for the pay, then debit bank and credit other income (or grant received) for the receipt.
Any thoughts? I set it all up as the first. Now being told this is wrong and its income and expense (rather than no expense at all).
I'm a little unsure about the first treatment, as a small charity with little income anyway, the furlough income is going to distort our total income quite a bit. My personal view is that usual donations might amount to only £30k in the year, and the furlough receipts could be a further £9k on top of that.
Heck, it could be the difference between needing an IER and NOT needing an IER.