Hi Mark,
We incorrectly invoiced a customer for VAT @ 15% when it should have been 5% this invoice has already been paid. My question is this; if I issue a credit note for the overpayment (£1155.00) this will not reset the VAT to the correct amoumt. How can I record this. Also this overpayent has aready been paid to HMRC and will need to be corrected in my next return. Advice please.
Hi John,
Create a Credit Note with two lines:
Line 1: £11,550 at 15% VAT
Line 2: -£11,550 at 5% VAT (note: amount is negative).
Then issue a refund to your customer for £1,155 as described here:
http://www.solaraccounts.co.uk/help/how-to-pay-a-customer-refund.php
This will reduce the Box 1 figure on your next VAT return by £1,155
Cheers,