There are a few options to post a write off within Insight Legal, and it depends on your VAT Operation and the circumstances of the write off as to which one is best for you.

 

HMRC Bad Debt  - For Bills Issued VAT Operation

Option A  - Is this an actual Bad Debt?

Per HMRC’s website (https://www.gov.uk/vat-returns/fill-in-your-return), VAT reclaimed on bad debts should be included in box 4 of your VAT return. The below steps will ensure this is the case.

1. Go to Accounts > Client 
2. Post a Credit O5 Office Transfer for the gross amount to your bad debts/ write off nominal

1. Select O1 Office Pay Bill and click on the outstanding Bill

1. Change the amount to £0.00

1. Mark the Payment Allocation as 'Full and Final' and then post

 

**The bill will no longer show as unpaid**

1. Go to Accounts > Nominal 
2. Lookup and open the bad debts / write off nominal
3. Select NV Nominal VAT 
4. Enter the VAT amount as a credit 
5. Click Post 

 

**This final posting will ensure that the VAT element appears in Box 4 of the VAT Return**

 

Write Off Costs Only  - For Bills Issued & Cash Received VAT Operations

Writing off Costs Only to compare Bills Issued Report with Profit & Loss Report 

1. Go to Accounts > Client and lookup Matter 
2. Post a Credit O5 Office Transfer for the NET AMOUNT of the write off to the bad debts / write off nominal

1. Post an OCB Office Credit Note Bill for the VAT AMOUNT and mark it as 'Full & Final'

 

 

**The Bill will no longer be outstanding on the Aged Debtors Report, and there is no impact on Fee Earner allocation.  The Bills Issued and Profit & Loss Reports will agree**

 

Writing off Costs Only to allocate against a Fee Earner 

1. Go to Accounts > Client and lookup Matter 
2. Select OCB Office Credit Note Bill and select outstanding Bill 

1. Post the OCB Office Credit Note Bill for the remaining part of the Bill, ensuring that the posting is marked 'Full and Final', and the allocation is correct
2. Click Post

 

 

**This will ensure that the credit is allocated against the Fee Earner's total billing figures**

 

Optional step

If you need the cost amount to go to the bad debts / write off nominal

1. Go to Accounts > Nominal
2. Look up the Billed Costs Nominal for the correct Department 

1. Select N9 Nominal Journal 

1. Enter the Cost amount and select Credit 
2. Look up the bad debts / write off nominal in 'Destination'
3. Ensure that both 'Bank' and 'Destination Bank' have the same bank selected

 

**By posting this N9 Nominal Journal entry, please be aware that the total of your Billed Costs Nominals on the Profit & Loss Report will not match the Bills Issued Report**

 

Write Off Disbursements Only  - For Bills Issued & Cash Received VAT Operations

04 - Office Disbursment

1. Go to Accounts > Client and lookup Matter
2. Select O4 Office Disbursement

• Enter 'Reference', 'Description' 
• Select 'Nominal' from the 'Pay To' drop down list

1.  
   1.  

 

• Enter the NET amount of the Disbursement and select the 'O' VAT rate
• Select 'Credit' 
• Select the bad debts / write off nominal from the nominal lookup
• Click Post 

06 - Office Bill

• Select O6 Office Bill 

• Enter 'Reference' and 'Description' 
  •  
    • Do not enter any 'Costs' as this is a credit disbursement bill

• Click on the Disbursements tab and select the credit disbursement and the 'Bill VAT Rate' of 20%

• Go to the Summary tab and post the Bill

01 - Pay Bill

• Select O1 Pay Bill

• Click on the Credit Disbursement Bill
• Amend the amount to £0.00

• Mark as 'Full and Final'
• Click Post 

Writing off Disbursements only with no VAT billed 

• Go to Accounts > Client 
• Select O5 Office Transfer 

• Enter the 'Reference' and 'Description'
• Enter the 'Amount' and select 'Credit'

• Select Nominal as the Destination and look up the bad debts / write off nominal
• Ensure that both banks are the same and click Post

Write Off Costs & Disbursements - For Bills Issued & Cash Received VAT Operations

Fee Earner Allocation and NO VAT on Disbursements 

• Go to Accounts > Client and lookup Matter
• Select OCB Credit Note Bill 

• Enter the Costs and Costs VAT to be written off 
• Mark as 'Full and Final' and Click Post 

If you need the cost amount to go to the bad debts / write off nominal

1. Go to Accounts > Nominal
2. Look up the Billed Costs Nominal for the correct Department 

• Select N9 Nominal Journal 

1. Enter the Cost amount and select Credit 
2. Look up the bad debts / write off nominal in 'Destination'
3. Ensure that both 'Bank' and 'Destination' bank have the same bank selected

 

**By posting this N9 Nominal Journal entry, please be aware that the total of your Billed Costs Nominals on the Profit & Loss Report will not match the Bills Issued Report**

 

05 - Office Transfer

1. In the Matter Posting screen, select O5 Office Transfer 

1. Enter 'Reference' and 'Description'
2. Enter the amount of Disbursement and select Credit 

1. Select Nominal as 'Destination' and lookup bad debts / write off nominal
2. Ensure banks are the same and click Post

 

**This will leave the Disbursement unbilled but will zero the balance on your ledger and ensure the Bill is not outstanding**

 

Fee Earner Allocation and VAT billed on Disbursements 

1. Go to Accounts > Client and lookup Matter
2. Select OCB Credit Note Bill 

• Enter the Costs and Costs VAT to be written off 
• Mark as 'Full and Final' and Click Post 

If you need the cost amount to go to the bad debts / write off nominal

1. Go to Accounts > Nominal
2. Look up the Billed Costs Nominal for the correct Department 

1. Select N9 Nominal Journal 

1. Enter the Cost amount and select Credit 
2. Look up the bad debts / write off nominal in 'Destination'
3. Ensure that both 'Bank' and 'Destination' bank have the same bank selected

 

**By posting this N9 Nominal Journal entry, please be aware that the total of your Billed Costs Nominals on the Profit & Loss Report will not match the Bills Issued Report**

 

04 - Office Disbursement

1. In the Matter Posting screen, select O4 Disbursement 

1. Enter the 'Reference' and Description
2. Select 'Nominal' in the 'Pay From' drop down list

1. Enter the NET amount of the disbursement and select the 'O'  VAT Rate
2. Select 'Credit' and look up the bad debts / write off nominal
3. Click Post 

 

O6 Office Bill

1. Select O6 Office Bill

1. Enter 'Reference' and 'Description'
2. Do not enter any 'Costs' as this is a credit disbursement bill

1. Click on the Disbursements tab and select the credit disbursement and the 'Bill VAT Rate' of 20% 

1. Go to the Summary tab and post the Bill

O1 Pay Bill

1. Select O1 Pay Bill

1. Click on the Credit Disbursement Bill 
2. Amend the amount to £0.00

1. Mark as 'Full & Final'
2. Click Post

 

 

Profit & Loss Report agrees to Bills Issued Report and NO VAT on Disbursements

• Go to Accounts > Client and lookup Matter 
• Select O5 Office Transfer 
• Enter 'Reference' and 'Description'
• Enter the total amount of the Costs and Disbursements and select 'Credit'

• Select Nominal and look up the bad debts / write off nominal 
• Ensure that the banks are the same and click Post

OCB Office Credit Note Bill 

• Select OCB Office Credit Note Bill 

• Enter the amount for the COSTS VAT only 
• Mark as 'Full and Final' and click Post

Profit & Loss Report agrees to Bills Issued Report and VAT billed on Disbursements 

• Go to Accounts > Client and lookup Matter
• Select O5 Office Transfer 

• Enter 'Reference' and 'Description'
• Enter Costs amount and select 'Credit 

• Select 'Nominal' in Destination and lookup bad debts / write off nominal
• Ensure banks are the same and click Post

OCB Office Credit Note Bill 

• Select OCB Office Credit Note Bill 

• Enter the Costs VAT amount only 
• Mark as 'Full and Final' and Click Post

O4 Disbursement

1.  
   1.  
      1. Select O4 Disbursement

• Enter 'Reference' and 'Description'
• Select 'Nominal' in the 'Pay From' drop down list

• Enter the NET amount of the disbursement and select the 'O' VAT rate
• Select 'Credit' and look up bad debts / write off nominal
• Click Post 

O6 Office Bill 

1.  
   1.  
      1. Select O6 Office Bill 

• Enter 'Reference' and 'Description' 
• Leave Costs as £0.00 as this is a Credit Disbursement only Bill

• Select the Credit Disbursement from the Disbursement tab and select '20%' VAT rate

• Go to the Summary tab and click Post

O1 Pay Bill

• Select O1 Pay Bill

• Select Credit Disbursement Bill 
• Enter the amount as £0.00

• Mark as 'Full & Final' and click Post

Not VAT Registered - No VAT Operation

Write off when not VAT Registered

• Go to Accounts > Client and lookup Matter
• Select O5 Office Transfer 

• Enter 'Reference' and 'Description'
• Enter Amount and Select 'Credit'

• Select 'Nominal' and lookup bad debts / write off nominal
• Ensure Banks are the same and click Post

O1 Office Pay Bill

• Select O1 Office Pay Bill 

• Select the outstanding Bill 
• Enter £0.00 in 'Amount'

• Mark as 'Full & Final'
• Click Post 

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