What is the best way to 'invoice' for deposits when registered for VAT?
I understand that deposits received should be accounted for as a current liability - e.g., 'deposits held' account which is the equivalent of showing a suppliers account as a credit balance (although technically not correct).

If an actual deposit invoice showing VAT is the way to go, then the question is redundant - although the 'sales' amount should be credited to a 'deferred income' account....and then reversed to sales when the final balance is invoiced.

Alternatively, a proforma invoice or 'request for payment' could be raised (and not booked as an invoice in the accounts package) and the receipt booked to 'deposits held' account......but is the VAT included in this amount???
I suppose a proforma invoice showing the deposit and the VAT amounts could be raised but obvioucly a line stating that 'This is not a VAT invoice', but what happens when you come to do the final invoice? Do you show the total and total VAT but insert a line stating 'less deposit'. Then the 'deposits held' amount would have to be in some way applied against the customer account...not easy!!

Anyway, I'm sure there is a simple way of doing this which complies with VAT and allows you to collect deposits and keep good records per job that someone out there is doing on a daily basis........help????