How do I account for retained deposits?
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Summary
The following article explains how to deal with any retained deposits for unit sales orders that have fallen through and for which you are keeping the deposit.
More Information
The law has now changed and you must account for V.A.T. on retained deposits.
To do this please raise a manual invoice for the full deposit amount including VAT. Mark the invoice as paid using the deposit as payment. You may need to create a sales centre to account for the nett amount or use an existing centre such as New Unit Sales. Seek advise from your accountant if you are unsure how to proceed.
- This article refers to the situation prior to April 2019 **.
Since no taxable sale has taken place and the contract has been broken, you should not need to account for any V.A.T. on this money, but you should check with HMRC or your local tax authorities to establish the correct procedure.
 | Once you have cancelled the sales order and chosen not to refund the deposit, the amount held on the customer's account will need to be paid off to a relevant nominal centre using " Sales Ledger Receipts". |
Go to " Sales Ledger Receipts".
- At "Customer:" type in the Customer's account code if known, or search for a Customer.
- Select the document that you wish to clear.
- Press <F> and <Enter> to pay the amount in full.
- Press <Esc> to enter the payment details.
- Enter an applicable comment e.g. 'Deposit Kept'.
- In the "Centre", enter an appropriate Nominal Centre code, or create one.
- If you do create one, ensure that it is on the 'profit and loss' as Sales.
- Press <Esc>.
- Choose [Accept] to post the payment.
See also
