The definition of ‘contra’ is: ‘against’ or ‘opposite’.
You can add a contra if no invoices/bills have been issued and you have either:
received a payment and refunded it to the same place.
made a payment and received a refund from the same place.
Adding a Contra
Click on the 'banking' tab on the left hand menu and it will take you to a list of bank transactions downloaded from your bank account.
Find the transactions that you wish to contra against one another - they should be equal and opposite (i.e. £100 paid in & £100 paid out).
Click on the transactions by clicking on the amount (i.e. clicking on £100 in the example above) & not the ‘Add’ or the tick next to the transaction. Then enter the following details:
For the ‘received’/’paid in’ transaction:
Select ‘Deposit’
Select Payee: leave blank
Expense account: select ‘suspense’ and if there isn’t an account called suspense add it by scrolling to the top of the expenses list
VAT code: ‘No VAT’
Click ‘Add’
For the ‘spent’/’paid out’ transaction:
Select ‘Expense’
Select Payee: leave blank
Expense account: select ‘suspense’ and if there isn’t an account called suspense add it by scrolling to the top of the expenses list
VAT code: ‘No VAT’
Click ‘Add’
Result
The result of adding a Contra is that you have an expense account with a positive amount and a negative amount so there is no effect on your accounts.
If the ‘No VAT’ code is selected the transaction won’t be entered on your VAT Return.