Cancelling an invoice from a previous financial year

I'm registered self employed and arranged to do some work for a small charity back in March. They were keen that I invoice them immediately so the invoice would fall in 2019-20. Now they don't want to do the work and I am happy to cancel the invoice but I have included it in my Self Assessment tax calculations for the year. 
Any ideas if I can set this against 2020-21 SA?

Replies

  • anniecaveanniecave Forumite
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    From an accounts point of view if you've already done your accounts for 2019-20 and you need to raise a credit note then yes, this would need to go into your 2020-21 accounts. 
    Indecision is the key to flexibility :)
  • PennywisePennywise Forumite
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    You can't "cancel" an invoice that's been sent out and recorded in your book-keeping and tax return.  You need to create a credit note of the equal but opposite amount, send it to the client and record it in your book-keeping dated the date you raised it.
    You should have adjusted it out of your P&L and tax return anyway as an advanced invoice, i.e. dr sales cr invoices in advance (current liability).  You should only include the value of work actually done or goods actually sold in your accounts (unless you're using the simplified cash basis, in which you wouldn't have included it anyway as the money wasn't received).
  • moongardenmoongarden Forumite
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    Thank you @anniecave and @Pennywise. I hadn't thought about issuing a credit note as I've not had to issue one before but that seems the best way to do it. 
  • Manxman_in_exileManxman_in_exile Forumite
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    I'd be a bit unhappy about a customer doing that - charity or no charity.  They make sure their year end is "ok" but no consideration for others.
  • Mistral001Mistral001 Forumite
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    I'd be a bit unhappy about a customer doing that - charity or no charity.  They make sure their year end is "ok" but no consideration for others.

    Totally agree.  Messing around with invoice dates to suit yourself or others is very risky and could in some circumstances be considered fraud.  If the charity does not amend their books for the next year to nullify the tax benifit they are receiving this year, they could be committing tax evasion which is a criminal offense.  But make sure that your books are correct.

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