Our clients pay by standing order each month and then we raise and invoice once a year that then offsets with these payments.
However we operate our VAT returns on a cash accounting basis.
How do I record the bank receipt to go to the customer account so that is shows how much they have paid in advance but also so that the VAT element of the payment received goes on our VAT return?
If I do a deposit and put to the customer, the customer account is right but it's not picking up on the VAT return.
If I do a receive payment, same thing, not picking up on the VAT return.
Quickbooks support suggested do a manual journal - this gets the VAT on the return but the customer account is net of the VAT rather than the gross.
I could manually adjust the return for the VAT on the payments on account, but then once the invoice is raised and allocated to the payments, Quickbooks then accounts for the VAT then and would have to manually take it back out at that point which has a high risk of missing something.
Quickbooks support also suggested a dummy invoice - but then my customer balance would be wrong and we wouldn't know how much they have paid in advance.
Any ideas?
