Really depends how you use the software. I'm sure that Bills take on this would be a little different to mine, but, for what it's worth...
If you knew that the refund was coming then you would have created a journal / accrual in the correct period which the receipt will reverse.
If you didn't know that the refund was coming then you need to create a journal in the correct period to be reversed by the receipt.
The basic scenario that you are attempting to achieve is
Dr Bank (as you have physically received the refund) Cr Creditors:Inland Revenue (as the tax figure will currently be overstated by the amount refunded)
remember though as noted above that the refund is for the period to which it relates, not when the refund is received / banked so the recording of the receipt will not be the only entries to be made.
Where the journal needs to be taken into account it will actually be :
Within the period in question : Dr Creditors: Accruals (a debit as an accrual of a refund) Cr Creditors:Inland Revenue (a credit as its to be a refund)
When refund receieved : Dr Bank Cr Creditors: Accruals
Don't know why, think that I'm just having a bad day combined with sunday afternoon laziness paired with refunds of accruals but it feels as though I just wrote something incorrectly in the above but for the life of me a cannot see it. Sure that now I've filled in the basics though you will have no problem seeing the logic and doing it properly if I have made a mistake.
If Bill replies take his answer over mine.
all the best,
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.
Hi Shaun. Think your mind blindness is that you are mixing business with personal
If it a sole trader, then the tax refund is not to the business but to the sole trader. I generally just note it is from HMRC for tax refund in the note part of the transaction, just for clarity
I would debit bank and credit Capital introduced (the flip of this would be when paying a tax bill from the business account, where I would credit bank and debit Drawings)
You could just use the REC button, select the correct bank account, and post to Capital>Capital introduced, in the respective Ledger and Anaysis Account.
Thanks guys....I thought you had deserted me!....... As I have had more than enough red wine with dinner I will (hic up) read this tomorrow where I am sure it will almost make sense
To correct this journal entry I orginally made I have to de reconcile it. The only way I have found how to do this in VT is to de reconile the statement for that period which is from May last year. And then of course I get a warning come up that it will throw all my bank recs out, so might have to reconcile again from May. Is this correct or is there an easier way?
