Hi following our year end, we have received a refund from HMRC, How do we book this receipt,
We have created a supplier and received the money in, however this has booked the value against our vat liability account?
Hi Pete,
It depends on the type of tax. If it is a VAT refund then it is correct to use the 'VAT Liability' account. If it is corporation tax (ie. your business is a limited company) then change the From Account to 'Corporation Tax Liability'. If it is personal income tax (ie. you are self-employed) then set the From Account to 'Owners Drawings and Personal Use'.
Regards,
Hi,
I have this same situation for a Corp Tax Refund for my Ltd Co. I've tried entering a General Transaction from Corp Tax Liability to my current account, but that leaves an outstanding balance on my Corp Tax Liability, should I add some kind of Credit Note too?
Thanks,
Hi Daniel,
If you are due to receive a tax refund then your Corporation Tax Liability balance should be negative, and the General Transaction increases the balance to zero. In order to have a negative balance in the liability account before recording the refund, you need to either (a) create an earlier tax payment larger than the corporation tax expense; or (b) decrease the opening balance of the Corporation Tax Liability account.
Please check with your accountant for the best approach in your case.
Regards