How To: Process VAT only credit

There are two methods for processing VAT only credits:

  1. Create a Return / Exchange for the original sale on which you have unintentionally charged VAT
  2. Create a VAT only SP ledger credit

Create a Return / Exchange for the original sale on which you have unintentionally charged VAT

The Return component will allow you to credit the original order, and the exchange document can then be modified to not include VAT.

Setup

In [ System Data | Sales Order Processing | Return Reasons ] create a new Return Reason of Customer does not pay VAT with a Processing Type of Return to Stock.

Process

  1. Open the Sales Order and create a Return for the entire order INC VAT by green selecting ALL the items in the grid and clicking on the Return button and pressing 'OK' in the confirm dialogue.
  2. In the Return set the Return Reason to Customer does not pay VAT [No Items Returning].
  3. Green select all the stock items and click the Perform a Direct Exchange button to add all the items to the lower grid.
  4. Check the Credit Original Delivery checkbox.
  5. Check the Charge Delivery on Exchange checkbox.
  6. Press Ctrl+S or click the disk icon is the button bar's SAVE button to save the Return.
  7. Click on button.
  8. If the customer record has been corrected so that they do not pay VAT, Click on the Goto the Credit Note option.
  9. Issue the Credit Note to the value of original order INC VAT.
  10. Click on the Goto the Exchange Note option.
  11. In the [ Returns Exchange Sales Order | Detail | Additional ] tab:
    • Un-tick the Calculate VAT checkbox; this also un-ticks the Delivery VAT checkbox.
    • If you have Inflate Prices enabled you will need to tick the Don"t inflate prices option.
  12. Check that the value of the exchange is correct.
  13. Press Ctrl+S or click the disk icon is the button bar's SAVE button to save the Returns Exchange Sales Order.
  14. Return to the Return and click on the Credit button for the Exchange Note. This will create a refund amount to be used against the Returns Exchange Sales Order.
  15. The balance can be either be:
    • Issued to the customer's statement using the Issue button or
    • Refunded to the customer using their original payment type using the Refund/Issue button.
  16. Issue the return exchange to settle the customer statement.

Create a VAT only SP ledger credit

This option will just credit the VAT element, but there is no way of producing a report to represent this to the customer apart from a payment remittance once it has been allocated.

  1. Open the [ Accounts | Detail | SPLedger ] screen.
  2. Press Alt+E or click the green triangle icon is the buttonbar's EDIT button to enter edit mode.
  3. Press F3 or click the NEW ITEM button has an icon that shows two sheets of paper (identified by having the top right corner folded down), arranged diagonally on the icon from top left to bottom right to add a new item.
  4. Use the Lookup dialog box to locate the customer that you wish to create the VAT credit for.
  5. Tick the Credit column checkbox.
  6. Fill in the value of VAT into the Tax column, ensuring the Net box is empty / zero (the Gross will reflect the same as the Tax column).
  7. Make sure the TaxRt column remains as Standard.
  8. Select an appropriate Sales nominal account in the N/C column.
  9. Fill out the InvDate / InvRef / Notes appropriately so the Credit can be recognised as linking back to the Original Invoice.
  10. Press Ctrl+S or click the disk icon is the button bar's SAVE button to save the entry
  11. This credit can then be applied to the original invoice as part payment on the [ Customer | Detail | Statement ] screen.

See Also


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