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Incorrect VAT calculated for payment to initial debtor?
We operate VAT on a cash basis, and are having problems with the VAT calculations for some invoices which have been recorded as payments to initial debtors.
In one case we have a payment for £881.25 for an invoice which was issued before the VAT rate changed to 15%. This should be £750 plus VAT at 17.5% (£131.25), but Freeagent is calculating the VAT paypable as £114.95 (which is 15%).
I can't see a way of specifying a custom VAT rate for payments to initial debtors like you can for invoice payments, is there some way I can work around this?
In one case we have a payment for £881.25 for an invoice which was issued before the VAT rate changed to 15%. This should be £750 plus VAT at 17.5% (£131.25), but Freeagent is calculating the VAT paypable as £114.95 (which is 15%).
I can't see a way of specifying a custom VAT rate for payments to initial debtors like you can for invoice payments, is there some way I can work around this?
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Inappropriate?Lewis,
You should be able solve this by creating an invoice prior to the FreeAgent start date - with the relevant rate of VAT on it - and explaining the money received as in payment for that invoice.
Since it's before the FreeAgent start date that invoice will be ignored from the accounting point of view, but the correct allocation of VAT should be made automatically.
Do let us know how you get on.
1 person says
this solves the problem
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Inappropriate?Ed
Sorry to open up this thread again. I am having a similar situation in that I am trying to reconcile one of my clients VAT return (YUK!) Anyway, I have isolated an error that has accounted for VAT on an initial debtor receipt, however this was for reimbursement of exact expenses paid out and did not attract any VAT. How do I tell FA that there is no VAT element on this receipt? Cheers
Emz
I’m fed up with the rain and battering winds!
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Inappropriate?Hi Emz,
So the money received is from a customer, for expenses?
I think in that case you'd need to do what Lewis did, i.e. remove that figure from the opening debtors total and put in an invoice dated before the FreeAgent start date, with no VAT on it.
Then when you allocate the receipt against that invoice then FreeAgent will know not to put any VAT on it.
Does that help, please?
Kind regards,
Emily -
Inappropriate?Hi Emily
Yeah I figured you would come back with that. I am happy to do that but it does seem a bit of a weird workaround for what must be a reasonably common occurance? Thanks for the prompt response. Keep up the good work. Lovin' y'all
I’m happy but a trifle surprised
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Inappropriate?Hi Emz,
I take your fair point. Perhaps we do need to think about remodelling the opening debtor and creditor entry?
What would you like to see, please - perhaps the option to enter debtor and creditor amounts at contact level, and to indicate how much of the gross amount is VAT?
All thoughts and feedback gratefully received, and thanks for the compliment!
Kind regards,
Emily
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