Agency Overpayment - Won't Send Corrected Remittance

[craig1]

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

An £overpayment + VAT credit note would cover that. The credit note will balance VAT to the right amount on your books and you'll also be able to match the payment from your bank account to the credit note.

[TheCyclingProgrammer]

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

<snip>

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.

This is what was confusing me about OPs' post - if the agency are operating self-billing then they should surely be issuing invoices, not simply remittances when they pay him.

[Project Monkey]

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.

+1

A remittance note means nothing in accounting terms. Yes, it's nice to know they've sent a payment, but you should be reconciling to invoices/credit notes.

[SimonMac]

This is where it gets fun, when the agency email me they call it a payslip, as this seems to be an automated process I have never given it consideration, what they email is a "Self Billing Invoice" which I raise my own invoice for to match.

They have sent me a letter explaining the over payment requesting the funds be returned, is this sufficient to be classed as a credit note? I assume not?

[SimonMac]

This is where it gets fun, when the agency email me they call it a payslip, as this seems to be an automated process I have never given it consideration, what they email is a "Self Billing Invoice" which I raise my own invoice for to match.

They have sent me a letter explaining the over payment requesting the funds be returned, is this sufficient to be classed as a credit note? I assume not?

Or do I issue the Agency the credit note?

[TheCyclingProgrammer]

They have sent me a letter explaining the over payment requesting the funds be returned, is this sufficient to be classed as a credit note? I assume not?

No. Like invoices, there are rules about what a credit note must show.

HM Revenue & Customs: Returned goods, credit notes, debit notes and VAT

Did the amount the paid you match the amount you invoiced (or that they self-billed for)? If so, just issue the credit note yourself. The original self-billed invoice and your credit note are the documents by which your bank statement will be reconciled (ignore the duplicate invoice you created for your records). Then pay them back the money shown on the credit note. Your books will balance and so will there's (the credit note will account for the money received in their accounts and the money sent from yours).

[Contreras]

I'm not sure why this needs to be so complicated. If the agency managed provide a remittance to match an overpayment, then surely they can provide a remittance to match an underpayment on the next cycle.

Reconciling is done on the overall account not the individual transactions. For your own accounts, either you enter self-billing invoices or your own invoices into the ledger - the net result should be the same (eventually).

For VAT returns it depends on whether you are using normal accounting or cash accounting rules and would need to span two periods to make a difference (and even then up to ~£2k, iirc, can be corrected on a following return without needing to be declared).

If they can't wait until the next billing cycle, and they won't issue a debit note, then I would a) ask for the self-billing arrangement to be cancelled and b) be concerned about their cash flow situation!