Forum Message

Deposits under the flat rate scheme

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.


Posted by Geoff Challenor on May 1, 2009 1:39 PM BST

Hi Geoff,

The simplest way to handle your situation is as follows:

  1. 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.

  2. 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)

  3. 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,


Posted by Mark McLaren (Solar Accounts) on May 1, 2009 3:57 PM BST