Applying a Payment to a Credit Note
Problem reported by Stephen Youngs FCCA 4 years ago
The original thread from a year ago has been answered (you can't!) but I think this should be bumped up to be a problem, see https://secure.clearbooks.co.uk/community/questions/7867/created. Seems more important than a development suggestion to me, as whilst the ClearBooks process physically recovers any VAT overpaid when it creates a refund transaction it doesn't produce the documentation required to back it up.
Gov.uk says (there will be a VAT notice behind this somewhere, just don't have time to look it up!):
When you return goods to a supplier or a customer returns goods to you, the balance of payment can be settled by issuing either a:
- replacement invoice
- credit or debit note
- If you exchange the goods for goods of the same value you don’t need to issue a new VAT invoice.
Credit and debit notes
These must show the same information as the VAT invoice and:
- why it was issued
- the total amount credited, excluding VAT
- the number and date of the original VAT invoice
My comment on the original thread is:
How can just processing a refund, without it being applied to a valid VAT invoice or credit note be correct? There is no 'source document' if you just pay a refund, what do you have to back-up the recovery of the VAT on the money repaid to the customer? Your original VAT invoice has not been amended, so you must have a VAT credit note to reduce the amount owed to you by the customer. If the customer has nothing to offset that against, then you have to be able to pay the credit note.
I think Kevin's suggestion is actually the ONLY workaround to this that can safely be used, the ClearBooks process is flawed.
I would be happy to be proved wrong however, please!