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WiganStore
November 15, 2020
Question

VAT on Customer Return

  • November 15, 2020
  • 1 reply
  • 0 views

Hi,
We are registered on Flat Rate Scheme for VAT. When we Sell item to customer we charge 20% to Customer for VAT and Pay 7.5% VAT to HMRC on Selling Price. But sometimes customer returns the item back we process full refund. In that case how to record that transaction in Quickbooks and will that VAT be returned which we already paid on sale but the item is returned back.
Thanks

1 reply

AlcaeusF
AlcaeusF
November 15, 2020

Hi @WiganStore,

 

Thanks for dropping by here in the Community. I can help you enter the transaction in QuickBooks and handle paid VAT from a sale of an item.

 

You can use the Refund receipt feature to record the reimbursement in the system. When adding an item, please make sure to fill the quantity, rate, amount, tax, and other fields accordingly.

 

Here's how:

 

  1. Click the + New option in the upper-left corner.
  2. Select Refund receipt or Give refund.
  3. Press the Customer ▼ dropdown, then select the customer you want to refund.
  4. Select the Refund From ▼ dropdown, and choose the bank you deposited the payment for the invoice.
  5. Add all products or services the customer returned in the Product or service column.
  6. Enter the necessary information.
  7. Select Save and close. 

Regarding the paid portion of the VAT, I recommend contacting HMRC. One of them will be able to assist you regarding the payment and provide additional guidance.

 

For more information, as well as how to refund an overpayment or credit, I recommend the following article: Record a customer refund in QuickBooks Online.

 

Keep us posted if you need anything else regarding the setup. Have a great day.

W
WiganStoreAuthor
November 15, 2020

hi,
If i do the above process before filling VAT. Will QB automatically exclude it from charging VAT on the amount i received from the customer when my product was sold?
Thanks

BettyJaneB
BettyJaneB
November 16, 2020

Hi there, @WiganStore.

 

Allow me to provide additional insights in this VAT concern.

 

When creating a refund receipt in QuickBooks Online, you'll need to make sure that the refund amount and the VAT code are correct. This way, the VAT will be excluded from the customer and to your return.

 

In doing this, just perform the steps presented by AlcaeusF above. If you need assistance with preparing and submitting the return you can always utilize this link: Submit a VAT return in QuickBooks Online.

 

Know that I got your back if you have any other questions. Just notify me by leaving a reply below. Take care!

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