VAT filing error - how can I correct my mistake?

Question asked by David Foster 7 years ago

Hi there. I could do with some advice here! We create our client invoices in excel and send them to the client so we have total control over the words and presentation and the costs are shown as a single rolled-up cost. Then I make a simple invoice on ClearBooks that breaks the items out across the 3 respective sales codes (I don't want the client to be exposed to those details). A little bit of extra work for me, but it's worked well for 5 years! Then 3 months ago I made a mistake which didn't spot till late and now I'm stumped how to resolve. On a Clearbooks invoice to a European client, I somehow added 20% VAT to a £5k invoice and didn't notice till just now. So the client invoice was right (£5k), and they've paid the right amount (£5k), P&L is right, but I suddenly noticed ClearBooks thinks that client owes us £1k and realised the ClearBooks invoice was wrong. The problem is that in the meantime, we've declared VAT and paid it. So Trade debtors is £1k too high and we've overpaid HMRC by £1k. I can't edit the invoice as it is locked as it's been submitted on a VAT return .I've experimented with the demo database, but no matter how I write it off, it won't come straight. How do I?

  • make the invoice fully paid and reduce trade debtors by £1k?
  • reduce VAT control by £1k to compensate for last quarter's overpayment?
  • change the VAT return so it reports the right number to HMRC and leaves us back at zero after filing. (so far, it's the last point that has defeated me). Any ideas please?
Write reply7

7 Replies

In future, the way to correct an error like this is to create a credit note with £0 net and a manual £1K VAT, set it against the unpaid invoice, to cancel it and the next VAT return will show the -£1K VAT

Best answer
7 years ago

Hi...

I am no VAT expert but have some experience recently in making a minor error on input VAT. The advice I was given was broadly you cant fix it after you have completed your HMRC submission so deal with it as a correction in the next quarter.

7 years ago

Thanks Mike -that's basically my thought too.I'm happy to simply knock £1k off the next submission (I haven't yet moved to submitting through ClearBooks so have manual control over the numbers I type in), but I don't know how to get the numbers straight in ClearBooks afterwards.

7 years ago

In my case the numbers were tinkered with by my accountant via a journal

7 years ago

Right- I've found the way to do it now after an afternoon. Writing off the invoice was totally the wrong approach. In the end I have:

  • created a new invoice with today's date for zero value but with -£1k of VAT.
  • gone back to the original invoice and deleted the payment against it, to leave an unexplained receipt.
  • explained the receipt against the -£1k invoice first, then against the £6k invoice second (order is important). That has tidied it up such that the client invoices are now "paid in full", trade debtors is now correct, the old VAT return is still in place so we have overpaid by £1k, and there is a -£1k transaction in this quarter's VAT to correct it back. So that will automatically appear when I run the VAT Return calculation - I don't even have to do a manual correction next quarter, just file the numbers ClearBooks calculates for me. Excellent. What a relief for a Friday night. Thanks.
7 years ago

Well done guys! It looks like you have worked it out well, David :)

7 years ago

In future, the way to correct an error like this is to create a credit note with £0 net and a manual £1K VAT, set it against the unpaid invoice, to cancel it and the next VAT return will show the -£1K VAT

Best answer
7 years ago

Simpler still. Thanks Paul for your simple and clear solution, as ever.

7 years ago

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