In a previous VAT period, a duplicate payment entry was made in my current account, both payments were later allocated to the outstanding balance on an invoice sent to a client. I have created a new entry as a “refund” to match the duplicate entry, but I now have an untagged entry and cant “remove” the original payment allocated to the outstanding invoice as this is locked. Is rolling back three VAT report periods to unlock the invoice, remove the duplicate payment record, and then re-submit the three VAT reports the only option?
Hi @Fredrik
We’ll certainly try to help resolve this for you, but I would just like to clarify a few points if you don’t mind?
Am I correct in thinking you received two partial payments towards the invoice and both are tagged to the invoice itself. However, one is a duplicate of the other. You’ve created a reversing bank entry for the refund but it’s currently untagged, and you’re looking for a way to tag that entry to reverse the duplicate. Is that correct?
Yes, this is exactly the case. Two payments of £1,801 were logged, one was a duplicate of the first. Both payments were allocated to the outstanding balance of the invoice. Everything is ‘locked’ as they are all from a previous VAT period. I have entered a back-dated “refund” entry for the duplicate entry, which is now untagged, and cant figure out how to (1) tag new now untagged refund payment, and (2) how to remove or reverse the “allocated, locked but now wanting to reverse with the new refund”. When I look for options for what to do with the refund payment, the list only includes other invoices, and I don’t actually want to refund anything, I want to “cancel” the allocated wrong allocation. Very thankful for any solution for how I can get around this problem!
Ok, got it 
In short, there is no simple way of accounting for this. However, your bank balance is likely to be higher than what it actually is due to the overpayment, so the best approach is likely to be just to correct it for yourself rather than HMRC.
I don’t think HMRC will mind you paying your VAT early 
What I would do at this point is, let’s say you have an invoice for £3,000, and you’ve duplicated 2 payments to it for £1,000 (therefore outstanding balance is now £1,000, but should be £2,000).
I would create a money out transaction in your current account, or wherever the payment for the invoice is tagged to, and tag this new transaction as a transfer to either Petty Cash, or create a new holding account. This should then correct your bank balance.
When the client does pay, simply create the transaction as you normally would in your current account, and tag it as a transfer from Petty Cash or the holding account, to reverse the correction above.
That way, you’re not rolling back VAT returns, and there’s no need for any dummy refunds etc.
Hope that’s clear, but please let me know if we can help further.
Note: I’m not an accountant, but if you need any specific help relating to your exact circumstances, I’d advise speaking to yours.
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