Please see extract from www.hmrc.gov.uk/employers/doitonline.pdf which explains how to account for the tax free payment your clients received for filing their end of year P35's online.
Accounting for the tax-free payments
Show the tax-free payments in your accounts as 'other operating income'.
The payments are not taxable, so your tax computations should show profit reduced by the payments included in your accounts.
Tax-free payments and VAT
You do not have to pay VAT on your tax-free payments for early online filing, nor do you have to show them on your return.
By Jo Nockels
Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.