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How do I explain being overpaid by a client?
One my clients accidentally paid too much for a group payment of invoices. The amount is only £7.50 so they're not bothered. However I've assigned payments to the appropriate projects and now left with an unexplained £7.50 in the banking section.
Any suggestions on the best way to explain something like this on my account details?
Any suggestions on the best way to explain something like this on my account details?
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Inappropriate?Why don't you just issue an invoice for the over payment?
You don't have to send it to them, and to be honest if they aren't 'bothered' about over payments then they're accounts are probably a mess anyway.1 Comment
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And then if I ever get audited by the HMRC I may end up having to explain the random invoice. -
Inappropriate?Yeah it's not ideal.
What about a credit note then? And then just pay them back by Cash or BACS.
The other thing you could do, although also slightly dodgy, is to make it a payment to your directors loan account, then you can pay yourself it back and your accounts will be fine. But then you're not paying tax on that £7.50 you got for, well, nothing.
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(At least with the invoice method you'd be paying tax - which would be favourable from HMRC's point of view I would think)
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Inappropriate?Hi guys,
With my fussy accountant's hat on I would say, definitely don't put it to your director's loan account, as if you do ever get an inspection from HM Revenue they'll be down on you like a ton of bricks :-)
What you could do, Ryan, is to explain the receipt as Other Sales Income? Then it'll go on to your P&L without messing up your customer's figures.
How's that?
Kind regards,
Emily
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I'll use that option, sounds like the most logical to me.
Thanks :) -
With my even fussier accountant's hat perched firmly on my head I must say I prefer Binary Monkey's original suggestion because it sorts out the VAT on the overpayment. I wouldn't worry about HMRC - tell them you did it to sort out the VAT correctly. That should shut them up!
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Inappropriate?Hi Ryan,
No problem at all, please don't hesitate to ask if you do get stuck again.
Kind regards,
Emily
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