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SGI
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:

DescriptionAmountVATTotal
Deposit charge100.000.00100.00
  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:

DescriptionAmountVATTotal
Move-in rent200.0040.00240.00
Apply credit from Reservation deposit-100.000.00-100.00
  Invoice amount100.00
  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)?

 

Solved
Best answer May 07, 2020

Accepted Solutions
sonenshinem
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.

View solution in original post

1 REPLY 1
sonenshinem
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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