We carried out maintenance work for a client in relation to an insurance claim they were making.   We invoiced our client £31,879.00 + £6,375.80 VAT for the work we completed.   We have now received £31,879.00 direct from Allianz Insurance, therefore the sales invoice still has an outstanding amount of £6,375.80 in connection with the VAT. 

What do I need to do on Sage to remove the £6,375.80 debt on our client's Sage account?  Also, should the £6,375.80 feature in our quarterly VAT return, even though we've never received the funds?

Thanks in advance.