What is the best way to 'invoice' for deposits when registered for VAT? I understand that deposits received should be accounted for as a current liability - e.g., 'deposits held' account which is the equivalent of showing a suppliers account as a credit balance (although technically not correct).
If an actual deposit invoice showing VAT is the way to go, then the question is redundant - although the 'sales' amount should be credited to a 'deferred income' account....and then reversed to sales when the final balance is invoiced.
Alternatively, a proforma invoice or 'request for payment' could be raised (and not booked as an invoice in the accounts package) and the receipt booked to 'deposits held' account......but is the VAT included in this amount??? I suppose a proforma invoice showing the deposit and the VAT amounts could be raised but obvioucly a line stating that 'This is not a VAT invoice', but what happens when you come to do the final invoice? Do you show the total and total VAT but insert a line stating 'less deposit'. Then the 'deposits held' amount would have to be in some way applied against the customer account...not easy!!
Anyway, I'm sure there is a simple way of doing this which complies with VAT and allows you to collect deposits and keep good records per job that someone out there is doing on a daily basis........help????
Are the invoices relating to One VAT QUARTERLY PERIOD and are the amounts recieved clearing the total invoice amount ie a Total Invoice of say £35000 would give us a VAT amount of £4565.21 Net 30434.79.
Now say the customer paid 2 equal instalments of gross 17500 Vat 2282.61 net 15217.39 17500 2282.61 15217.39
The amounts still tally albeit 0.01 but why not raise just one sales invoice.
-- Edited by Davey on Friday 2nd of October 2009 06:20:03 PM
