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Old 09-05-2016, 06:39 AM
charlie67 charlie67 is offline
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UK Corporation Tax refund

Hi. I have received a refund of my corporation tax paid for year 2013/14, This was because I had a loss last year 2014/15. Its great to get money back, but googling and spending hours trying to find the answer, I donít know how to record this refund of the full amount and a small amount of interest.

To record the corporation tax initially I Credited "Corporation Tax Due" (Other Current Liability) Debited "Members Equity". Then made a payment from my current account and debited the "Corporation Tax Due" account.

Now I have the same sum refunded to me plus an interest amount. This has obviously credited my Current Account, but I need to make some other entries I presume?

Help would greatly be appreciated.
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  #2  
Old 09-14-2016, 11:25 AM
Lorin Browning Lorin Browning is offline
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Whatever account you used to record the tax expense (which would have been a debit to that account) will be the account to use to record the refund (as a credit entry) and a debit entry to the account used to record the payment of the expense. It is hard to tell from your post whether you paid the tax from the company account or from a personal account. If paid from a company account and the refund was deposited to that account, then a debit entry to that account. If paid from a personal account, you have to decide where the refund goes -- either to the company or to the original provider of the funds. If to the original provider of the funds who is the person who will receive the refund (less the interest) then the debit entry is to Members Equity.

The interest received will be posted to a revenue (income) account -- to something like "interest income received", which often is an Other Income account.
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Last edited by Lorin Browning; 09-15-2016 at 04:40 PM.
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Old 09-16-2016, 06:14 AM
charlie67 charlie67 is offline
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Quote:
Originally Posted by Lorin Browning View Post
Whatever account you used to record the tax expense (which would have been a debit to that account) will be the account to use to record the refund (as a credit entry) and a debit entry to the account used to record the payment of the expense. It is hard to tell from your post whether you paid the tax from the company account or from a personal account. If paid from a company account and the refund was deposited to that account, then a debit entry to that account. If paid from a personal account, you have to decide where the refund goes -- either to the company or to the original provider of the funds. If to the original provider of the funds who is the person who will receive the refund (less the interest) then the debit entry is to Members Equity.

The interest received will be posted to a revenue (income) account -- to something like "interest income received", which often is an Other Income account.
Thanks Lorin.
The payment was all to and from my company bank accounts, no connection to my personal bank accounts.
So from what you are saying, The one that I debited originally, I would credit. This is Member's Equity (Equity account)
and credit the Company Bank Account.
i.e. use the the make deposit screen in quick books, Deposit to my Bank Account, received from Vat Man, and from account would be Members Equity.

Then the interest portion paid into my company bank account, would be recorded as a credit to my Interest Income account (Other Income).
i.e. use the the make deposit screen, Deposit to my Bank Account, received from Vat Man, and from account would be Interest Income.

Is that right? Thanks so much for your help.
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Old 09-18-2016, 09:06 AM
Lorin Browning Lorin Browning is offline
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Sounds good to me, with one possible exception:

The corporation tax paid (at least in the U.S. but I am not positive about the U.K.) is an expense to the corporation. You may want to check whether that was taken as an expense. If it were taken as an expense, then the equity section entry would automatically be reduced by QuickBooks and would not have required a separate entry.
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  #5  
Old 09-19-2016, 10:47 AM
charlie67 charlie67 is offline
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Quote:
Originally Posted by Lorin Browning View Post
Sounds good to me, with one possible exception:

The corporation tax paid (at least in the U.S. but I am not positive about the U.K.) is an expense to the corporation. You may want to check whether that was taken as an expense. If it were taken as an expense, then the equity section entry would automatically be reduced by QuickBooks and would not have required a separate entry.
Thank you. I appreciate your advice.
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