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WiganStore
Level 1

VAT on Customer Return

Hi,
We are registered on Flat Rate Scheme for VAT. When we Sell item to customer we charge 20% to Customer for VAT and Pay 7.5% VAT to HMRC on Selling Price. But sometimes customer returns the item back we process full refund. In that case how to record that transaction in Quickbooks and will that VAT be returned which we already paid on sale but the item is returned back.
Thanks

5 REPLIES 5
AlcaeusF
Moderator

VAT on Customer Return

Hi @WiganStore,

 

Thanks for dropping by here in the Community. I can help you enter the transaction in QuickBooks and handle paid VAT from a sale of an item.

 

You can use the Refund receipt feature to record the reimbursement in the system. When adding an item, please make sure to fill the quantity, rate, amount, tax, and other fields accordingly.

 

Here's how:

 

  1. Click the + New option in the upper-left corner.
  2. Select Refund receipt or Give refund.
  3. Press the Customer ▼ dropdown, then select the customer you want to refund.
  4. Select the Refund From ▼ dropdown, and choose the bank you deposited the payment for the invoice.
  5. Add all products or services the customer returned in the Product or service column.
  6. Enter the necessary information.
  7. Select Save and close

Regarding the paid portion of the VAT, I recommend contacting HMRC. One of them will be able to assist you regarding the payment and provide additional guidance.

 

For more information, as well as how to refund an overpayment or credit, I recommend the following article: Record a customer refund in QuickBooks Online.

 

Keep us posted if you need anything else regarding the setup. Have a great day.

WiganStore
Level 1

VAT on Customer Return

hi,
If i do the above process before filling VAT. Will QB automatically exclude it from charging VAT on the amount i received from the customer when my product was sold?
Thanks

BettyJaneB
QuickBooks Team

VAT on Customer Return

Hi there, @WiganStore.

 

Allow me to provide additional insights in this VAT concern.

 

When creating a refund receipt in QuickBooks Online, you'll need to make sure that the refund amount and the VAT code are correct. This way, the VAT will be excluded from the customer and to your return.

 

In doing this, just perform the steps presented by AlcaeusF above. If you need assistance with preparing and submitting the return you can always utilize this link: Submit a VAT return in QuickBooks Online.

 

Know that I got your back if you have any other questions. Just notify me by leaving a reply below. Take care!

WiganStore
Level 1

VAT on Customer Return

Hi,
I have an online store on ebay when i send refund it automatically shows the return transaction in QB. Will that still needs to process with the same way as mentioned above by adding New Refund Receipt? Because i tried doing this but after that it shows option to Match the transaction with the transaction which QB got automatically from my Paypal Transactions. Thanks

EmmaM
QuickBooks Team

VAT on Customer Return

Hello WiganStore, In this case, have you first created a sales receipt for that customer? If so then yes you would need to do a refund receipt to record the refund. It is fine if it matches the refund if you did have the expense of paying them back in real life from your Paypal after first recording it as a sale?

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