Cancelling Invoice With Invoice

[ajayre]

Hi! I'm looking for a little bit of advice or pointers on how to do the following. I'm using Microsoft Accounting Express, but I think this is a generic accounting question.

I have a VAT registered sole-trader business. Another company is a VAT registered business in Germany and it is both a supplier and a customer.

The German business sent me some items to sell and an invoice for them. I recorded this in the books with no VAT. So far so good.

I now need to invoice them for consulting services with the same amount, so my invoice cancels out their invoice. I guess also no VAT involved.

I have an "Inventory" asset account that shows the value of my stock. When I added the invoice from Germany that account went up in value and so did the Purchase Ledger.

What do I need to do now to enter my invoice and either issue payments or enter journal entries to tidy this up? For simplicity all values are in GBP.

Thanks! Andy

 

[kpdorset]

I've never used your accounting software but at some point you need to take the stock from your 'Inventory' account and put into a Cost of Sales account. Some accounting programmes do this for you automatically when you create the sales invoice. I have to select 'Item' Sales invoice not 'Service' in my software to get this to happen.

 

[Mpg]

I use that software an recently had a similiar problem. I set the customer up as a supplier too and then had an Invoice and a purchase order. which both cancelled each other out on the monies owed screen. Then I marked them both as paid from the same account.

Not as complicated as yours but may help

Although after re-reading your post probably not

 

[3pic]

The German business sent me some items to sell and an invoice for them. I recorded this in the books with no VAT. So far so good.

I now need to invoice them for consulting services with the same amount, so my invoice cancels out their invoice. I guess also no VAT involved.

Just as an aside, to make sure you get teh VAT bit right (as it sounded like you weren't sure)

The items are sent from Germany to the UK as zero rated. You then account for the VAT at the UK rate and enter this value on the VAT return in Box 2 and then reclaim the same value as input tax in Box 4.

Whetehr VAT is involved or not will depend upon the type of consultancy you do for the German client. If we assume it is some sort of consuiltancy using your expertise in the UK, then the place of supply will be Germany and so you can zero rate your invoice to them.

if you supply/install something in the UK, your place of supply will be the UK and your invoice to germany will be stanard rated at the UK VAT rate.

 

[ajayre]

Thanks for the replies - I think I understand what I need to do now.

Andy