Payment of VAT in Advance

Payment of VAT in Advance

In cases where payment of VAT is due on the receipt of part payment or delivery of the service, we have a few options for you.
Alternatively, contact our support centre so that a consultant can assist you with this process.

The following will need to be considered:

• If the VAT is calculated on the full invoice value and the deposit is a part payment, then VAT is being paid on money that has not been received.
• Most bookings are dynamic, so the value is likely to change between the date of first payment and the delivery of the service.
• In the case of cancellations, the service is never delivered and the payment may be refunded to the guest.
  

To minimise the above complications, either of the following procedures may be followed.

OPTION 1

• Create a Deposit extra (Vatable)on the reservation for the value of the deposit and place it on a new folio.
• Invoice the deposit folio.
• Record the payment received against the deposit folio.
• Add a Deposit Reversal (Vatable) extra charge to the main folio with a negative value equal to the value of the deposit.
• Update the reservation payment plan.
• When the main folio is invoice, it will reflect the full booking value less the value of the deposit.

The implications of this approach are:

• VAT is only paid on money that has been received or on services that have been provided.
• Credit notes are not required.
• Invoices within any given month will follow in sequence.
• After the final invoice has been processed, the VAT liability will have been correctly accounted for, including consideration of components that may be vatable, e.g. Park Fees.

OPTION 2

• Invoice the full booking upon receipt of the deposit.
• After each change in the value of the booking:

• Void the invoice with a credit note
• Make the changes to the invoice
• Re-invoice

Implications of this approach are:

• It is possible that the VAT incurred could be greater than the deposit received.
• It is likely that there will be a significantly increased number of invoices and credit notes.
• Invoices within any given month will follow in sequence.