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Readers’ forum: Enquiry

07 December 2021
Issue: 4820 / Categories: Forum & Feedback
VAT enquiry on input and output tax errors.

One of my clients manufactures furniture and it has come to light that there are big output tax errors on her last four VAT returns.

My client receives an order to make say a special oak table and the customer will pay a non-refundable 50% deposit before the work starts which she correctly treats as inclusive of VAT. At the end of the job the customer pays the balance owed and my client raises a tax invoice for the full job. The error is that my client has posted the full amounts of VAT on her sales invoices to the VAT control account double paying output tax on the initial 50% deposit.

My client recently submitted a repayment return which has been queried by HMRC. And it has come to light that she has made the same error with payments to her suppliers...

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