According to the previous Bookkeeper 2-3 years ago Amex failed to credit our bank account with customer card payments worth £30k. The Bookkeeper tried but failed to collect this money from Amex (very strange!) and had written off customer accounts outstanding balances totalling to £30k. He does not remember if VAT on theses sales was written off as well at that time or was it paid to HMRC, which customer accounts were affected or which account(s) it was written off to. I am not able to trace these transactions in the system. My question is, as we now have received £30k into or bank account, which is technically our income, should we account for VAT on this receipt? I personally think we should. Do I create a sales invoice for the gross of £30k? The additional bookkeeping complication is: the receipt of £30k was debited to the bank and credited to the sales account in the previous accounting period and I am nor sure what the entries in the new financial year should be.
UK VAT on written off customer payments received at the later date
- Thread starter loulou
- Start date
It's highly likely that the VAT was paid since it's unlikely that the debt was written off before the end of VAT period it was due to be paid in. So your question is probably more one of was the VAT payment claimed back when the debt was written off? Surely the VAT returns are stored somewhere? So you need to dig them out and see what you can find.
It seems a tad odd that you can't trace the accounts in the ledger as it's normal to have a code for "bad debts written off" or something similar that is used to write off the debt.
It seems a tad odd that you can't trace the accounts in the ledger as it's normal to have a code for "bad debts written off" or something similar that is used to write off the debt.
Yes, of course, my first thought was to look into a bad debts account but nothing ever was recorded there. The main difficulty is that the receipt from Amex was the total of a few customer payments. My predecessor posted a credit notes at that time (does not remember which customer accounts or which sales accounts were effected) with an intention to hide these debts in the system without telling the management about a failure in getting the funds due from Amex!