Agency Overpayment - Won't Send Corrected Remittance

[SimonMac]

Ok, so here is the story.

I am self billing with an agency, they send me a remittance and I raise an invoice to match it, one week they over payed me, 3 weeks later they finally get round to asking for the money back, they have requested the money be returned (I am fine with this) however they are refusing to send out an amended remittance for the correct amount saying "we are unable to process corrected remittances by law".

This has got me thinking, as it stands I have a remittance for them for more than I will ultimately receive from them so am concerned I will be liable for VAT on the whole amount rather than the correct amount.

Or should I ignore their remittance and just go by my own raised invoices and so the only dependency will show on my bank statement which can be explained with the email exchange kept.

[eek]

<NLUK mode>
Have you asked you accountant?
</NLUK mode>

[SimonMac]

<NLUK mode>
Have you asked you accountant?
</NLUK mode>

Yes, and I told myself I don't know

[rd409]

Ok, so here is the story.

I am self billing with an agency, they send me a remittance and I raise an invoice to match it, one week they over payed me, 3 weeks later they finally get round to asking for the money back, they have requested the money be returned (I am fine with this) however they are refusing to send out an amended remittance for the correct amount saying "we are unable to process corrected remittances by law".

This has got me thinking, as it stands I have a remittance for them for more than I will ultimately receive from them so am concerned I will be liable for VAT on the whole amount rather than the correct amount.

Or should I ignore their remittance and just go by my own raised invoices and so the only dependency will show on my bank statement which can be explained with the email exchange kept.

Can you not create a credit note to go with the remittance? That would balance out the books.

[TheCyclingProgrammer]

Ok, so here is the story.

I am self billing with an agency, they send me a remittance and I raise an invoice to match it, one week they over payed me, 3 weeks later they finally get round to asking for the money back, they have requested the money be returned (I am fine with this) however they are refusing to send out an amended remittance for the correct amount saying "we are unable to process corrected remittances by law".

This has got me thinking, as it stands I have a remittance for them for more than I will ultimately receive from them so am concerned I will be liable for VAT on the whole amount rather than the correct amount.

Or should I ignore their remittance and just go by my own raised invoices and so the only dependency will show on my bank statement which can be explained with the email exchange kept.

You say you have a self-billing arrangement but that the agency send you "remittances". Shouldn't they be sending you valid VAT invoices if they are self-billing? You can create duplicate invoices for your own records if you wish but I would have thought that the only invoice that matters is the one that the agency send you.

Treat it as if it were you that had invoiced them for too much, which they then paid. Wouldn't you just issue a credit note for the overpayment to reduce their liability, then either refund the overpayment (balancing the credit note) or use it as deemed payment towards your next invoice.

I wonder though if under the self-billing arrangement, it should be the agency that issues the credit note. It probably doesn't matter.

[Scruff]

A Credit note won't balance the books?

All you need to do is ensure that your invoice is correct and then issue them a remittance advice referring to the overpayment by them, which has been refunded.

[TheCyclingProgrammer]

All you need to do is ensure that your invoice is correct and then issue them a remittance advice referring to the overpayment by them, which has been refunded.

Under a self-billing arrangement, aren't the self-billing invoices raised by the agencies the "official" invoice? Any invoice you generate for your own records are simply duplicates and should match whatever the "official" invoice says.

If the agency are correctly issuing self-billed invoices and they overpaid in the sense that they have transferred more money than was stated on the invoice, then there is nothing to balance, you can simply transfer the excess amount back to them.

If they've issues a self-billing invoice for the "wrong" amount though, and the payment and invoice matched, then strictly speaking the agency hasn't over-paid, they have been over-invoiced and surely a credit note is required to balance not just OP's books, but their books as well (otherwise as far as the books are concerned, the invoice would be underpaid).

[craig1]

Technically they're correct. Once issued, a remittance is a factual document and shouldn't be amended. They pay you £100 but should have paid you £80, the remittance for £100 is accurate as that's actually what they paid you and can be tied to their bank statements. From that, the process that looks neatest on books would be for you to issue them with a credit note for £20 and refund it. If they don't want to do that then you could give them the credit note and they could deduct from a future invoice but that's not as neat on the books. Treat VAT as almost irrelevant if you do it that way as it'll sort itself out on the credit note.

It's all to do with pointing bits of official paper (invoices, receipts and credit notes) at individual bank transactions. If you have to dig out emails to show to a HMRC inspector what a strange banking transaction means then you're just inviting them to dig deeper and spend more time with you.

[SimonMac]

Technically they're correct. Once issued, a remittance is a factual document and shouldn't be amended. They pay you £100 but should have paid you £80, the remittance for £100 is accurate as that's actually what they paid you and can be tied to their bank statements. From that, the process that looks neatest on books would be for you to issue them with a credit note for £20 and refund it. If they don't want to do that then you could give them the credit note and they could deduct from a future invoice but that's not as neat on the books. Treat VAT as almost irrelevant if you do it that way as it'll sort itself out on the credit note.

It's all to do with pointing bits of official paper (invoices, receipts and credit notes) at individual bank transactions. If you have to dig out emails to show to a HMRC inspector what a strange banking transaction means then you're just inviting them to dig deeper and spend more time with you.

As it stands I have paper work for the money in, and a demand for the over payment to be returned, I am just wary that when it comes to my VAT Return I only have paperwork for the higher amount unless I only put the "sale" as the corrected amount rather than the invoiced amount

[Scruff]

A remittance is not an invoice, it is purely a record of an amount which has been paid.

If they have issued an invoice, in YourCo.'s name, which matches the remittance, then they will need to issue a credit note in YourCo.'s name.

If you raise the invoice in YourCo.'s name yourself, then just issue them a remittance advice note for the amount you are paying back to them.

It is the Invoice and Credit Note which are the legal instruments and affect the Revenue of YourCo., either on the cash or accrual basis.