Tax Code Correction after VAT reconciled

[mentalworx]

Using Line 50, v12. Cash accounting.
Year end Nov 30
Problem: We correctly posted a sales invoice (approx £1000) in October for a customer in Portugal with Tax Code T4. However although we had previously posted the prepayment received as "Payment on Account", we mistakenly recorded it as T0.

My bookkeeper missed this when doing the subsequent VAT return, and year end. Now we can't correct as the VAT reconciliation has been done.

Apart from the wrong posting, it won't allow us to clear down the invoice against payment due to the mismatch of tax.

Appreciate your suggestions !

[brucedenney]

The original payment was made as a payment on account with the wrong tax code (T0 instead of T4). And now can not be matched.

The correction is to do a T0 invoice to match off the T0 payment and a T4 Credit note to match off the original T4 invoice. Use a mispostings account for the nominal it's net effect will be zero.

You will then have four transactions to match off in customer receipts

[mentalworx]

That makes sense. Many thanks !

Useful site this.