Posting in sps

[Samah]

help???
We are paying a disbursement on behalf of a client. The net amount before VAT was transferred to office account because the client is not liable to pay VAT . We paid the full amount from office.
How do we post that?

[DelDB]

Hi Samah,

Was the value that was paid out of Office the NET amount or the Gross? The easiest option may have been to pay the cheque out directly from the Client account rather than transferring it to the Office.

[Samah]

The gross amount was paid from office.
the client account would be overdrown if we paid from there bacause the client is not liable for the VAT

[DelDB]

Am I correct in assuming that you have been billed for, for example, £115.00. £15 of this is VAT so you've only taken £100 from the client. Thus leaving you to cover the extra £15?

[Samah]

Thanks for responding.
yes that is exactley the case.

[DelDB]

this is a strange one really. Ideally you wouldn't expect for something to cost "you" money. Have you discussed this with your accountant as to were they would like this posting to.
I was always under the impression the entire amount should have come from the clients bank.

[trevorfleming]

hi

why is the client not liable for the VAT on that disbursement, surely the client is liable for the whole amount of the disb no matter what. the client isn't liable to the VAT man, but is liable for the full amount of the disb.

you can pick up the difference in the bill posting exercise either interim or final at the end of the matter and your client would then pay the difference at that time. allocate the disb against the office payment and the difference should appear on bill

You will probably need to post an entry to correct the original entry on the ledger and then repost the disb in full.