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My client had some outstanding invoices but their customer disagreed with the figures and also queried the amounts previously invoiced. They insisted that my client had overcharged them which resulted in overpayments being made. In the interim their customer invoiced them for faulty workmanship. In ended up going to court and an amount was agreed and settled.
My problem is how do I sort this out and does it affect the VAT.
For example
- My client has outstanding sales invoices of £1500 which includes VAT and CIS deductions
- Their customer disagreed and billed my client £4000 which included VAT in respect of overpayments and incorrect invoices.
- Their customer also billed my client an additional £1500 which included VAT for faulty workmanship
- Therefore my client owed their customer £5500 and they owed my client £1500
It was agreed that my client would pay their customer £3000 as final settlement.
How do I sort this out?
Cancel all invoices and bills?
Offset invoices and bills?
Just enter settlement?
So confused on this one please somebody help me!!!
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