VAT Refund

[angmc]

Can anybody tell me how to deal with a refund of VAT from a supplier?

We paid the supplier on a pro forma invoice at 17.5% VAT. They then issued a VAT invoice/receipt at 15% VAT & sent us a cheque for the refund of VAT. Not sure how to enter it correctly.

I’m using version 15.

Thanks

[brucedenney]

Did you enter the proforma as an invoice and have a 0 balance on the supplier account, or did you enter the real invoice and now have part of the payment on account left over?

[angmc]

I think I might have sorted it. I had entered the pro forma as an invoice & had a 0 balance. I was advised to enter & pay off the new (15%) invoice as normal & then just do a wright off/refund on the original pro forma. This apparently is all I need to do & sorts the VAT out, although I did have to change the VAT code back to 17.5% before doing the refund.

Does that sound right to you?

[brucedenney]

You should enter a credit note to reverse the incorrectly entered proforma invoice.

You should then enter the corrected invoice.

The negative balance on the account will be wiped out when you enter the suppliers cheque.

If you do as suggested the VAT you reclaim against the proforma will be wrong.

It might be a small amount, but the VAT inspector will not like it.

[angmc]

I know what you mean, that's what I thought but I did a practice on the original suggested method & it did seem to work. When I first did the Refund on the 17.5% proforma I didn't change the default code back to 17.5 so the VAT portion of the refund was calculated at 15% so therefore the VAT return was wrong, but doing it again with 17.5% as the default code it worked ok & the VAT return was correct.

I'm no Sage expert (far from it) so I'm hoping I'm not missing something?

Does the fact that I'm using version 15 make any difference?

[brucedenney]

Re-reading this, it sounds like you havn't paid the invoice yet you left if as a payment on account I guess, so as long as you don't pay off the 17.5% invoice, both methods would work, the incorrect invoice with 17.5% must not be paid, it has to be written off or reversed. Reversal with a credit note is a little more clear and would work if you had paid the invoice already.