Credit note to reduce unpaid invoice amount always 20% VAT

When creating a credit not to reduce the unpaid amount of an invoice, the VAT rate used for the credit note is 20% and cannot be edited. Bug observed with invoice having time event lines at 0% VAT rate. In this case, the credit note should also use 0% VAT rate.

If you go on invoice screen itself and click on Credit note, you should see an option Reduce unpaid balance, it should automatically pick unallocated total balance with zero vat rate (if initial invoice is zero rated).

I did a quick test with a sales invoice and a purchase invoice but I’m not seeing this problem? Can you let me know the CN number on your account where you experienced this problem?

If we have invoice with mix rates like 20% and No vat then above stands correct, system wont give you an option to choose vat rate or edit it

@john the VAT defaults and locks to 20% when you create a new line on a credit note. We are looking into this today. I would suggest if you are trying to create two lines just use the existing line and enter additional notes there, unless you need to post a partial amount to a different nominal code then there’s no need to create an additional line.

@Accountant credit note VAT rates are generally locked to avoid rounding errors on split invoice and partial refund scenarios. As on the sales side we have fixed VAT rates (i.e. no provision to enter the VAT directly) it’s not possible to definitively tag a percentage to an amount. We will eventually allow sales VAT amounts to be overridden but there’s quite a bit of work there to complete this, and only in a smaller number of cases does it ever present a problem.

@Glenn, thank you for your response.

In my scenario, I have zero rated time event lines in the original invoice, but I wish to raise a credit note with an item line because the value is unrelated to an hourly rate. So, unfortunately, your suggested workaround won’t work.

All Quick File does here is produce a copy of the original invoice with the entries reversed, you can edit the amount on these entries accordingly. So if you had a time event on the original invoice it would appear on the credit note. Looking at the credit note example you sent me this doesn’t look to be the case as I can only see one item on the original invoice.

@Glenn, the reported issue appears to be fixed now anyway. I can create new items on a credit note and select an appropriate VAT rate for them. Excellent.

Thank you to you and your team for looking at this.

1 Like

Excellent, glad to help!