Output Tax on Overpayments

Q. My client has been paid twice by a customer for the same invoice. He has tried to contact them but without success as they appear to have gone out of business. Does my client have to declare output tax on the overpayment?

A. No, where an overpayment is received due to a mistake by a customer it is not consideration for any supply and is therefore outside the scope of VAT (VATSC63600). However, if supplies were going to be made to the customer in future, and the overpayment used as a payment or part payment for those future supplies, then at this point it does become consideration for a supply and liable to VAT.

If you have a VAT query why not contact the VAT Advice Line on 0844 892 2470 to discuss the implications. Our team of experts have a wealth of experience and can also provide a written consultancy service at £180 per hour plus VAT.


Book your place at our upcoming Seminars:

TaxVatSeminar_FacebookTimeline_2017SeminarsAreComing

Thursday June 22 2017 | Dunsilly Hotel, Antrim

Details & Booking

2017TaxVatSeminar_FacebookTimeline_HMRCEnquiriesSeminar2

Wednesday September 13 2017 | The Peninsula, Manchester

Details & Booking

Back to Community

VAT Consultant
0844 892 2470


Julie has worked in VAT since 2004. She started at HMRC as an Assurance Officer where she carried out compliance visits on a wide range of VAT registered businesses.

Julie joined the team in 2007 where she has gained extensive knowledge of many aspects of VAT and advises clients at Croner Taxwise on the VAT advice line, undertakes bespoke consultancy and has editorial responsibility for the team’s journal VAT Voice.