Compensation Payment
T.C.
Registered, Tutor Posts: 1,430 Beyond epic contributor 🧙♂️
My client has paid a plumbing company to work at a new property installing all plumbing and heating and has paid them.
The plumbers have messed up and now need to pay my client approximately £2,000 in compensation, which they have agreed.
How do I show this? Should it be as a credit against the original invoices from the plumber or should it be shown in another way? Presumeably no VAT would need to be charged - it is a new build zero rate property!
Your input would be appreciated.
The plumbers have messed up and now need to pay my client approximately £2,000 in compensation, which they have agreed.
How do I show this? Should it be as a credit against the original invoices from the plumber or should it be shown in another way? Presumeably no VAT would need to be charged - it is a new build zero rate property!
Your input would be appreciated.
0
Comments
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You could post it against the expenses or you could show it as other income.
Kind regards
Steve0 -
Vat
If I call it income, then what about the VAT, can this still be zero rated?0 -
Compensation should not have VAT on it, as it is similar to an isurance claim receivable.
You could either show it as
1) A credit in the expense nominal where the original invoice/payment was posted.
or
2) A credit in other income nominal labelled 'compensation receivable'. Hope this helps0 -
Thanks
Thanks. That is very helpful! :thumbup:0
