Insurance excess and VAT

Victoria84 · ‎August 16, 2023

I need to raise an invoice for a customer as they are liable for the VAT and excess portion of a vehicle repair. I have raised an invoice for their insurance company, for the net amount due, less the excess of £500.00.

However, as we are also VAT registered I need to know how best to deal with the VAT amount as we will need to include this on our next VAT return? Do I just raise an invoice with two lines items (excess and VAT) to the customer and then post a journal to the VAT account?

Any help would be appreciated.

Thanks in advance

Ashleigh1 · ‎August 16, 2023

Hello Victoria84, you can raise a VAT only transaction for this, here are the steps to follow below or you can look on this help article.

1. If it's related to Sales, you can create a Sales receipt transaction.

2. On the first line of the transaction, select the category and enter the VAT amount with 20% VAT. If it's for Purchases, create an Expense transaction.

3. On the second line of the transaction, select the same category and enter a negative VAT amount with No VAT code.

4. Below the subtotal, change the VAT amount to the total VAT amount you want to record in the VAT return.

5. Lastly, click on Save and Close.

VAT only

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