Hi I run a wedding venue in the UK.
When a bride and groom book a wedding, they pay a deposit to secure the date, which I record through a sales receipt recording 20% VAT on the payment Cancellations are not uncommon in the wedding industry. If cancelled shortly after making the booking, I will often refund 50% of the deposit (including VAT) paid using a Refund Receipt. On cancellation, the balance of the deposit is deemed forfeited and output VAT is no longer payable (as the sum is deemed to be compensation - not VATable).
My question is how to record that adjustment in Quickbooks. My output VAT liability should reduce by the amount of VAT charged on 50% of the deposit. At the same time, the forfeited sum remains taxable as income, so my income should increase by the amount I reduce my VAT liability.
I can't work out how to record this adjustment, so any guidance would be very much appreciated.
Thank you!
