I am struggling to work out how to post the following..
We invoiced a customer with 17.5% vat and received payment. We then realised that the vat should have been charged @ 5%. The difference has been worked out and the customer has been refunded. I made a manual adjustment when doing the vat return on sage.
To which account should I debit the total amont refunded to the customer?
Would it be to the Manual adjustments account to clear the balance?
I find when working in sage and you do a journal it can be difficult to know what that particular journal was for when you look back at your accounts later and what I do in these type of situations is to raise a dummy credit note in sage for just the vat difference and then raise an invoice to a sundry account with the ref and description stating payment for adjustment VAT and then just make a payment through your bank posted to the same sundry account back to the client. This would keep a record on the suppliers account of this adjustment so you are fully aware at a later stage and it's easier to trace if need be.
The easiest way to do this is (assuming the customer account is clear as they have paid the invoice in full) is to do a dummy credit note on their account for the amount of the difference making sure you leave the net column at zero, the Tax code at T5 (or whatever your tax code is for 5%) and just put the amount of the VAT difference in the VAT box. This will show the overpayment on their account. You can code it to your sales nominal 4000 as the effect on this will be zero anyway.
Then you do a customer refund (from the Customer module) making sure the Tax code box is T5 as above and put in the amount of the refund. When you have saved this you need to go into Bank - Customer and net off the credit and the refund against each other.
Hope this helps.
Pauline
-- Edited by Stardoe on Sunday 14th of November 2010 04:38:45 PM
