We have just started to use Solar from 1 April because of having to register for VAT. We have chosen the "Flat Rate Scheme".
We are a Guest House and charge a deposit of £50 on booking with the balance payable on checkout. Customs and Excise tell me we must pay VAT on the £50 when it is paid and not when the final invoice is paid at checkout. It may be a different VAT quarter when the deposit is paid and when the final invoice is paid. If I set up an invoice at time of booking showing the £50 paid will this do the job? What happens if I then change the date of the invoice to that of checking out?
Your help and advice would be appreciated.
Hi Geoff,
The simplest way to handle your situation is as follows:
Use the cash basis to calculate your VAT liability. To do this, click menu Setup > Contact Details & VAT > Vat is Calculated When Payments are Received.
When a client makes a booking enter an invoice for the total cost of the booking. Enter a future date for the invoice (ie. the date the client has booked the room for). Also record an invoice payment of £50 for this invoice - use the date you received the deposit (ie. a date before the invoice date)
When the client pays the balance record another invoice payment. If the client cancels and forfeits the deposit, record a credit note (the amount should be the balance of the invoice) and then apply it to the invoice.
I hope this makes sense - let me know if you need more information.
Regards,