Add Credit Note

The Credit Note transaction allows for creating or modifying a credit note as well as emailing to the customer and/or printing a hard copy.

If a credit note creation transaction has just been completed, a confirmation statement displays in a grey line just beneath the main menu area. In the confirmation line the PRINT icon prints the credit note. The credit note is created in a pdf format so that it may be printed for posting as well saved on the local computer. Clicking the MAIL OK icon will send an email with the credit note attached to the email address associated with the Customer. Hint, the email address will display if the mouse pointer hovers over the icon. If no valid email address has been entered then the NO MAIL icon will display.

Note for a non VAT registered entity, reference to VAT rates and VAT amounts should be ignored.


Customer

Enter the Customer from which the income has been received.

Auto-complete field names

Rather than a drop-down to select from a list, simply start typing and the system will identify any occurrences of the combination of characters entered and you select from that shorter list. As an example, type 'able' and the system will offer:

Able Contractors

Capable Cleaning

Reasonable Roofers

etc.

Adding new customers / suppliers

If the combination of characters you enter does not provide any results, press tab and the system will know you need to add the customer/supplier and ask you to confirm the details. At this point add address, email contact etc if required.

Credit Note Number

You may enter a credit note number or you may leave the field empty. If the field is left blank the next credit note number is generated for you. Credit note numbers are generated using the same sequence as that used to generate invoice numbers.

The next number for the sequence can be modified from the Business Profile Maintenance screen via the Accounting Options tab.

Purchase Order Number

In an Invoice to a customer the purchase order number (P/O number) is normally the customers reference number that you want to associate with a specific invoice/credit note. This allows the customer to easily cross-reference your invoice/credit note with their purchase order.

In a Bill from a supplier the purchase order number (P/O number) is normally the order reference number that you asked them to associate with a specific invoice/credit note.

Credit Note Style

You can specify the style that you would like for your printed credit note. This field defaults to the value selected for Default Document Style on the Business Profile screen but you can always override the default on the credit note if required.

The goods credit note style is used when a product code as well as descriptions are being shown on the document. The displayed product code is set in the sales item maintenance screen

Message

You can enter up 200 characters of additional free format text for printing on the credit note. This text will appear in the area allocated towards the bottom left of the credit note.

Sales Item

A list of sales items offered by the organisation.

Rather than a drop-down to select from a list, simply start typing and the system will identify any occurrences of the combination of characters entered and you select from that shorter list. As an example, type 'con' and the system will offer:

Consultancy Services

Design Consultancy

Office Contracting

etc.

If the combination of characters you enter does not provide any results press tab and the system prompts for a new sales item to be set up. Navigate to the Sales Items menu.

Income - Sales Items - Add

Enter sales items information as usual.

Additional Item Text

You can enter up 500 characters of additional descriptive text for the item. This text will be printed on the invoice/credit note.

Rate

The rate for the selected sales item is the default unit amount set up when the the sales item was created. The default rate can be overridden if required.

Net Amount

The net amount associated with the item.

When recording purchases, if you have a gross amount and want liberty to calculate the net amount and vat amount simply enter the gross amount in this field, select the appropriate VAT code, and type "g" in the VAT amount field.

VAT Rate

The appropriate VAT rate for the account must be selected. Default VAT rates can be associated with an account via the Account Maintenance screen which is available from the chart of accounts view.

If the business is on the HMRC Flat Rate VAT Scheme, as defined on the VAT details tab of the Business Profile, the VAT rate will default to "Out of Scope" for all purchase transactions. This can be changed if necessary. Exceptions may apply for purchases of capital assets of significant value, please consult your professional advisor.

Current VAT Rates

20.0%, 5% & Zero, used for normal UK VAT transactions.

Exempt

Used when a transaction is an exempt supply; such as the purchase of insurance. See the VAT Guide (Notice 700) for more details or visit the Revenue and Customs site at www.hmrc.gov.uk

Ended 31/12/2020 except for Northern Ireland - EU Acquisition

Used when you purchase goods from a VAT registered supplier in an EU member state. Make sure that the VAT code is set to EU Acquisition, and that the VAT amount shows the VAT which would have applied if the purchase had taken place in the UK. The correct country must be set on the supplier record to ensure correct reporting of the transaction.

No longer in use , kept for historical record only - EU VAT

Only used if you have you have incurred VAT in an EU member state, (i.e. local VAT). This CANNOT be recovered as input tax for UK VAT. You may make a claim for refund from the member state. A scheme exists to do this known as "Refunds of VAT in the European Community for EC and non-EC businesses" The details are in notice 723, refer to the Revenue and Customs site at www.hmrc.gov.uk Use of this VAT code is described more fully in the "VAT and Liberty Accounts" user guide.

Out of Scope

Used when a transaction is not in the VAT system at all. For example payments into a money purchase pension scheme are out of scope because they are equivalent to savings. Recording a payment of VAT to HMRC is a common example where Out of Scope should be used, as are salary payments and repayments of director loans. Using this code will result in no VAT reporting impact.

None

This code is used where there is no VAT on a purchase transaction, typically from a supplier who is not vat registered. This is not the same as zero rated, exempt or out of scope. The impact is that the value of the purchase is included in box 7 of the VAT 100 return.

20% and 5% Domestic Reverse Charge (Used on Sales Invoices only)

Use either of these codes when a sales invoice is being raised that is subject to domestic reverse charge VAT. This has the impact of not adding a VAT amount to the invoice total but annotates that domestic reverse charge applies.

Where domestic reverse charge apples to a customer (receiving a bill with domestic reverse charge notification) see the special note below.

Average

This code can be used where there the transaction is recording an aggregation of mixed VAT codes in a single entry with the VAT amount manually set as required.

Import VAT (Used on Purchases only)

This code is used if the organisation buys goods from outside of the UK for use in the business then it may use a system called postponed VAT that allows it to account for VAT on the VAT 100 return rather than paying VAT immediately at the point of entry. This is a potentially complex area and so we strongly advise you consult with your advisor.

Special Note - Reverse Charge VAT

Reverse Charge VAT

Reverse Charge Procedure (for services from foreign suppliers)

If you are a VAT registered business in the UK and receive services from suppliers in other countries you may have to account for VAT to HMRC. This is known as reverse charge. The system provides a procedure for dealing with this.

Enter the transaction normally and select an appropriate Standard Reverse Charge VAT rate that would apply if the purchase had taken place from a UK supplier. The appropriate entries are made to the VAT100 report and any VAT transaction reports.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received, at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The net impact on VAT is zero; additionally the VAT100 return also displays sales and purchase values in the appropriate boxes.

Domestic Reverse Charge

Domestic reverse charge is essentially an anti-fraud measure and applies to a range of goods and services transacted between UK VAT registered suppliers and customers and includes:-

For customer receiving a bill subject to domestic reverse charge

Enter the bill or payment in the normal way select an appropriate Domestic Reverse Charge VAT rate that would normally apply as notified on the bill. The appropriate entries are made to the VAT100 report and any VAT transaction reports.

The system impact is to add to the VAT control account an amount of output tax (as if a sale) calculated on the full value of the supply received, at the same time add (subject to the normal rules for deduction of input tax) the same amount of VAT as input tax to the VAT control account. The net impact on VAT is zero; additionally the VAT100 return also displays sales values in the appropriate box.

Note that the system distinguishes between domestic and non domestic reverse charge by the country stored on the supplier record.

VAT Amount

The amount of VAT charged on this item is automatically calculated based on the vat code selected but can be changed.

When recording purchases, if you have a gross amount and want liberty to calculate the net amount and vat amount simply enter the gross amount in the net amount field, select the appropriate VAT code, and type "g" in the VAT amount field.

The vertical-nav-24-compact-grey action box symbol gives access to the following actions.

Open
to view/modify details relating to the invoice. Note if a receipt has been allocated to the invoice or it has been included in a filed VAT return the details may only be viewed not amended.
Audit

to open a transaction audit report that provides a non-editable history of the transaction and its accounting impact. The report details which user recorded the initial transaction together with the date and time as well as the details of any subsequent amendments.

Delete
to remove the invoice. Note if a receipt has been allocated to the invoice or it has been included in a filed VAT return the delete option will not be available.