Stripe. Fraud. Past VAT period. Help!

[Remidiah]

The issue
In March 2022 we issued a VAT invoice, we collect using Stripe. Customer paid via card. Customer receives statement and does not recognise our charge - it’s reported as a potential fraud. Customer then recalled the transaction, told his Bank (NatWest) all OK. Bank said Fine! BUT Stripe continued fraud path, we entered a defence agreed by both NatWest and Customer. Stripe did not believe us and say NatWest agreed! Stripe charged us a fee and recalled the money. Reason? Probably the computer says NO
Result
Our invoice is in a previous VAT period so frozen
Initial payment by Stripe shows invoice as paid so our VAT liability continues
Stripe, having initially paid us for the invoice, less their fee, correctly claimed the money from our main bank account yet the invoice continues to be marked as paid and no change has been made to the Stripe holding account - and of course we can no longer change or even cancel the invoice (which would have been a simple option!
If we issue a credit note we then need to “pay” the customer their money or be left with a pre-payment on their account.
We needed the money so issued a new invoice and included Stripe’s Fraud fee. Customer pays immediately and is upset (also is a Lawyer!!)
By issuing a second invoice I know we’ve kicked the can down the road yet what do we do?

[ian_roberts]

I’d do something like this:

• credit the original invoice in full, refunding from the stripe holding account
• create a money out transaction on the stripe holding account for their fraud fee and tag this to bank charges or however you normally deal with stripe fees
• tag the transaction where they reclaimed the money from your current account as a transfer to the stripe holding account

If the numbers add up this should leave you with the original invoice fully credited, the fraud fee on your P&L, and the stripe holding account back where it should be. The replacement invoice and corresponding payment can then be handled as normal.

The credit note “refund” payment and the replacement invoice payment will cancel each other out (or nearly so) on the next vat return so you won’t end up paying double VAT or anything like that.