Depends if the deposit is just a deposit or an advance payment disguised as a deposit.
For a returnable deposit there is no VAT to account for as you are simply holding a clients money as security and the money does not belong to you.
For a deposit that is in fact an advance payment (i.e. deposit of two months rental in advance) then VAT must be charged on the deposit in the normal way.
HTH,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
it is a security deposit .As I understood from your reply Shaun we could omit this transaction from VAT records.However, since we have an invoice for it(no VAT ) I believe we have to report it in the VAT return ,am I right?That's why I posted my original question.
Ok, the thing to ensure is that when recording this invoice is it not a sale and should go nowhere near sales in your records.
The deposit is recorded as
Dr Bank Cr Security Deposit liability account
There is no VAT on the security deposit and to my mind there should be no reason for it to be recorded in the VAT return.
I would not record a deposit in the box 6 figure as it is not a sale and the money is actually a liability in a similar fashion to a loan.
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
