For the bad debts if there was VAT on the sale you will want to reclaim the VAT so should be T1.
For overpayments then assuming you are on an invoice basis the VAT would have been declared on the invoice then you would want to code the overpayment as T9. If you are on a cash basis the VAT would be on the payment received so will want to claim back VAT overpaid on the overpayment so should code as T1. (though not sure if SAGE restricts the VAT to the amount of the invoice). If so then this isnt an issue.
And of course if there are credit notes that have not been taken and I want to clean the accounts up, I would treat the same as the invoices.
I think I got myself a little confusedas I was looking back on the financials and each bad debt that has been written off previously was dont with a T9 code and I cant understand why.....done before my time working here.
Don't forget you can only claim back VAT on a bad debt if it is over 6 months old. Maybe that's why the debts were written off with a T9 code. If the debt was under 6 months old then the whole amount would have been written off to bad debts with T9 tax code and when you were able to claim the VAT back a journal would be needed to credit bad debts and debit purchase tax control account.
Depending on yr version of sage there is the bad debt write off under customer section (write off/refund) - this will automatically write off using T9. as stated above, reason being is the write off rules including over 6 months old. Once completed a journal will be required for the VAT element from (journal from 8100 to purchase VAT (again VAT write off ruling unless any changes since I last looked). in journal enter the Tax code T1.
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Donna Curling - Complete Book-Keeping Ltd (CBKLtd) - 07939 101900
Thank you so much for your advise. Donna, what do you mean when you say the 'write off rules including over 6 months old'? I thought once they were 6 months old and there was no way of retrieving the money it was ok to write them off. Again thankyou you all for your advise.
hi, I think that's the same - just pointed out that there are rules to follow including if part paid and credit note issued etc.. The Bad Debt can be written off as soon as you know however the journal to reclaim the VAT cannot be entered until the 6 months have lapsed. Ive tried to mention that I haven't full VAT ruling to hand as my licence does not cover me giving tax advice.
-- Edited by Donna CBK on Monday 18th of June 2012 09:44:11 PM
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Donna Curling - Complete Book-Keeping Ltd (CBKLtd) - 07939 101900
