Problem with Purchase Invoice inc VAT return & Credit notes


I am having trouble with a supplier account, I created an invoice for an opening balance as such from 2016, I have been marking of payments made throughout the year to realise the supplier and I haven’t married up. Unfortunately the payments have been included in the VAT Returns so I couldn’t just delete them so I created credit notes but the outstanding amount hasnt increased? Would someone be able to look at this for me?

KInd Regards


Hi @ejbookkeepingservice

Just to confirm the situation here - you had a supplier opening balance, so created the invoice for this balance and been marking payments against it. As you’re on cash accounting, these payments are being included on your VAT return.

However, the payments you’ve logged don’t necessarily match what has been paid to your supplier and you’re looking for a way to ineffect, reverse them.

Is that correct?

Thank you for your response,

yes that is correct

Credit note would be the best way to handle this as this would also adjust your next return in response to it.

This would be correct. The credit note would act either as a balance reducer (if there’s money outstanding), or a refund (which in turn would increase your bank balance by creating a bank transaction for it). In that case, you would need to recreate the invoice to tag correct payments to it.

Or, it may be easier to adjust this in your next VAT return and account for it manually going forward until things even out again. Just ensure you have something to back these up should any queries be raised by HMRC.

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