Hi

I wonder if you can help with the following scenario, as I am unsure how to reflect these transactions on Solar accounts:

A client of our plumbing and heating company had a boiler installation completed by us under the ‘Eaga Warmfront’ scheme.

This meant that we had to display a £300 discount on their invoice. This was done with a negative (-£300) entry to the ‘discount’ account.

On the other hand, Eaga has provided us with a rebate for £251.07 and a VAT invoice for £48.93.
NB: we do not have to physically pay the invoice as the bill is reflected in the rebate (£300 less £251.07). It is purely so that we can claim the VAT.

Are you able to advise at all, how to reflect the £251.07 which is paid into our bank account and the invoice for £48.93?

I hope this makes sense.

Ellinor Robinson

Hello Ellinor,

Let me make sure I understand the cash flows involved. Let's say your invoice to the client is for £1,000 plus £150 VAT, less the £300 deduction. The cash flows would then be as follows:

1.You receive £850 from the client
2. You receive £251.07 from Eaga
3. You pay £143.62 to HMRC for VAT (ie. £150 less £6.38)

Is that correct?

Hi Mark

Yes, that is correct.

Ellinor

Hi Ellinor,

Ok - first create a new Income account called 'Eaga rebate'. Then record two transactions for the rebate:
1. A Money Received transaction for £300 (inc VAT). The VAT Treatment should be 'Sale of Goods or Services to UK Customer' and the From Account should be 'Eaga rebate'
2. A Money Paid Out transaction for £48.93 (inc VAT). The VAT Treatment should be 'Purchase of Goods or Services from UK Supplier' and Allocate To Account should be 'Eaga rebate'.

I hope this makes sense - let me know if you need more information.

Regards,

Hi

Sorry to come back to this after such a delay, but I am still unsure of the instructions given, after just having got the chance to revisit this query.

I created an income account called ‘Eaga rebate’ by clicking on the ‘Accounts’ item on the list on the left hand side, then selecting ‘new’, account type – ‘income’ and the account name – Eaga rebate’.

Next, from the home page, I went to receive a payment and this is where I became stuck. The ‘received from’ only has customers and suppliers – it does not have ‘Eaga rebate’. Do I need to create an account here as well?....and also what should be in the ‘deposit into’ field?

Also, as mentioned originally, in order to show the customer discount of £300 on the invoice, I input a negative £300 under the ‘discount’ account so this account balance is £300. Does this need to be offset anywhere?

Many thanks in advance.

E Robinson

Hi Ellinor,

Yes, when you record the Received From transaction, enter 'Eaga' in the Received From field. This will create a new 'customer' called Eaga. The Deposit Into field will be Cheque Account - you should also use this as the Paid From Account when recording the Money Paid Out transaction.

You are correct to enter negative £300 on the invoice. I originally assumed you would use 'Sales Income' on the discount line, but it is also fine to use a new Income account called 'Discounts'. Note that the discount includes VAT (the 'Prices include VAT' box should be ticked), so the balance of the Discounts account will be smaller than £300.

Using my original example of a £1,000 invoice (plus £150 VAT), you would end up with:
Sales Income £1,000.00
Discounts -£260.87
Eaga Rebate £218.32
------------
Net Income: £957.45

Cheers,