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Level 3

# How to classify/handle security deposit later credited towards rent payment?

We have started to rent some storage space.

In the first invoice the landlord company has charged us a security deposit which had 0% VAT.

Invoice was like this:

 Description Amount VAT Total Deposit charge 100.00 0.00 100.00 Invoice amount: 100.00 VAT: 0.00 Total: 100.00

We have paid this invoice.

Later they have issued the invoice for rent which went something like this:

 Description Amount VAT Total Move-in rent 200.00 40.00 240.00 Apply credit from Reservation deposit -100.00 0.00 -100.00 Invoice amount 100.00 VAT 40.00 Total: 140.00

As you see, VAT was calculated on whole amount, and amount was later discounted by the previously paid security deposit.

How should I go about classifying these two invoices and corresponding transactions (where we pay 100.00 first and 140 later, but 140 includes 40 pounds of VAT)?

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Level 3

## How to classify/handle security deposit later credited towards rent payment?

Not a problem, sir!  The 100 rent deposit should be booked directly to the creditors account, with NOVAT.  For example, create a cheque or expense in the bank account and categorise the proceeds toward the creditors account specifying the payee as bieng the landlord.

Then when you get your rent bill, input a bill for 200 with VAT 40 as normal.

Apply the 100 in the creditor account toward the bill and apply an ordinary bank payment for the rest of the bill.

[email address removed] is my e-mail in case you need anything.

Level 3

## How to classify/handle security deposit later credited towards rent payment?

Not a problem, sir!  The 100 rent deposit should be booked directly to the creditors account, with NOVAT.  For example, create a cheque or expense in the bank account and categorise the proceeds toward the creditors account specifying the payee as bieng the landlord.

Then when you get your rent bill, input a bill for 200 with VAT 40 as normal.

Apply the 100 in the creditor account toward the bill and apply an ordinary bank payment for the rest of the bill.

[email address removed] is my e-mail in case you need anything.

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