I look after a kitchen sales company, who do not issue invoices as such but enter contracts with their customers. They ARE VAT registered.
So on Sage when I eventually enter the sales I raise an invoice for the contract amount, which includes VAT (so I use the 'calc net') option.
My client has just advised that for one customer he took an additional £220 (which he has banked) which is actually for a plumber and an electrician and their invoices come to £220 (they are NOT VAT registered).
Now if I enter that £220 in the normal way he has to pay VAT of £36.67 on the sale (assumed included), so he has automatically made a loss of that amount.
Am I right to process it this way?
I want to say to him either they should pay these people direct or he should add 20% so that he doesnt lose out. Just want to make sure Im right before I speak to him
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
the end users contract was with your client. That they subcontracted the work was almost a no never mind.
VAT is chargable on the supply so as things stand your client is closer to a charity for Plumbers and Electricians than a business as they just charged £183.33 for a job that had £220 associated costs.
Sometimes I really think that we should be running the clients businesses rather than just tidying up after them.
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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.
Its one of those I wish he had asked about before he did it (he did with a couple of other things!), but hey ho will no just have to be the bearer of bad news!
Thanks Shaun.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
