How do I enter refunds in my accounts?
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  1. #1
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    Default How do I enter refunds in my accounts?

    A have a parent who pays by direct debit each week but the hours have reduced recently and so should the weekly amount she should pay me. I gave her 4 weeks notice to change her direct debit but 8 weeks on from that she is still overpaying me each week. I am scrabbling about for change each week to refund the difference.

    She is driving me mad now, she says she has been to the bank, rang them up to change it and all sorts, but now I am starting to think she is on the fiddle with her tax credits.

    How do I account for this? Do I enter the overpaid direct debit as income and then put the refund/change as an expense?

  2. #2
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    Oh don't know. Can you cancel the direct debit going in with your bank. Are you getting her to sign anything when you give a refund. It's a 2 minutes process to change the direct debit job I have done it before for other direct debits. Ring her bank and ask how do you change the amount of a direct debit and tell her this how it done this hoe long it takes.
    Tess1981

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    I would enter in my accounts the amount she actually owes you and put the surplus over payment into a deposit account then when she has sorted out her bank account you can either let her have a payment break while you use the money from deposit account or providing she isn't paying you using employers workplace vouchers (which it doesn't sound like she is), you could just pay her back the extra money. I only enter through my accounts the money that was owed rather than the amount they paid.

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    Tell her that you can only refund 1 payment due to money laundering, that's what I do!

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    Quote Originally Posted by critch View Post
    Tell her that you can only refund 1 payment due to money laundering, that's what I do!
    What you mean??? Is my head that scrambled today
    Tess1981

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    I would send it back to her bank as a payment
    Debbie

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    Quote Originally Posted by cookiesncream View Post
    A have a parent who pays by direct debit each week but the hours have reduced recently and so should the weekly amount she should pay me. I gave her 4 weeks notice to change her direct debit but 8 weeks on from that she is still overpaying me each week. I am scrabbling about for change each week to refund the difference.

    She is driving me mad now, she says she has been to the bank, rang them up to change it and all sorts, but now I am starting to think she is on the fiddle with her tax credits.

    How do I account for this? Do I enter the overpaid direct debit as income and then put the refund/change as an expense?
    I don't think she pays you by direct debit - if she did the direct debit would be arranged and controlled by you.
    It sounds like she pays you by standing order of BACS so should be easy to sort.

    I would pay the money back through your bank account - let her tell you what her bank details are and refund it in your own time - she is the one in error - don't go making yourself short of cash because she hasn't sorted it out. It's not difficult to amend!

    Secondly - you need to write down the amount she has paid you and write overpayment then the amount refunded and write refund. If you look back through your accounts at the end of the year to reconcile them - ie look at what money you received in your bank and what you have in your records they will not match and will make no sense. Likewise if the tax man checked he would be wondering why you had not stated the actual income because there is no reconciliation between what is on your bank statement and what you have recorded. saying you have refunded her money can not be proven if you have been refunding her cash and not stating it in your records!

    The amount she receives from tax credits is irrelevant to how much she should be actually paying you - if they wanted to check they wouldn't check her bank outgoings they would be asking for receipts or confirmation from you.
    It sounds to me like she is just a bit dis-organised but I would definitely be saying - sorry I don't have any cash I will refund through your bank. f she doesn't let you have the details just hang on to the money until she does or give her a cheque! or tell her you are keeping it and she can take it of the next payment! that ought to make her hurry up and sort it!

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    Quote Originally Posted by hectors house View Post
    I would enter in my accounts the amount she actually owes you and put the surplus over payment into a deposit account then when she has sorted out her bank account you can either let her have a payment break while you use the money from deposit account or providing she isn't paying you using employers workplace vouchers (which it doesn't sound like she is), you could just pay her back the extra money. I only enter through my accounts the money that was owed rather than the amount they paid.
    Personally I would show what was paid and then an adjustment showing a refund so that the tax man knows your not fiddling your income! Also do you not get confused when you reconcile your accounts at the end of the year?

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    Quote Originally Posted by cookiesncream View Post
    How do I account for this? Do I enter the overpaid direct debit as income and then put the refund/change as an expense?
    If you put it back in as an expense, it would be you fiddling your tax accounts.(I think)


    For example, if she used to pay £100 per month. This would have 10% taken off for wear and tear, leaving an amount of £90, which would be used for your tax calculation.
    If she now pays £80 per month. This is really £72, for your tax calculation once the 10% has been taken off.
    But if she pays you £100, but it should be £80, and you put this through as an expense, you would have £100 - 10% (wear and tear) - £20 ( from your expenses) which would be £90 - £20 = £70.
    This would give you £70 for your tax calculation rather than the £72 it should be. Over the year this amount would add up, and could cause problems.

    ( I hope this is correct and not too confusing)

    I think the best thing would be to tell her to sort it out!


    Good luck

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    yes it would be clearer if you put the payment and the refund under income so it can be seen clearly what it refers to so for example:


    Income: .................................................. ........................ Expense:

    Child A pmt + £50 .................................................. .............. toy £10
    Child B pmt + £50.............................................. ................... outing £10
    Child C pmt + £60 .................................................. ............. food £10
    Child C RFND - £10 .................................................. ............. jigsaw £10



    your income and outgoings will match what is shown in your bank account, on your customer receipts and on your invoices, on your receipts that you have bought things with and it will show whats what when you reconcile your accounts at the end of the year and if the tax man ever checked.

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