How this works

Always allocate refunds entirely to either a credit note or a payment on account. Reconciled refunds

Reconciled refunds

These refunds show in bank reconciliations. On your bank activity, they have a tick in the reconciled column.

You can't change the refund amount. Delete and re-enter the refund instead.

An edited refund stays reconciled when you change the Reference, Method, Ledger Account, and Date, as long as the date stays within the reconciled period it will stay reconciled for that period.

An edited refund becomes unreconciled when you change the bank account, or date to a date that is later than the end date of the reconciliation.
For these transactions:

• We remove the edited transaction from the completed reconciliation. To tell you this, we add a Removed from reconciliation label to the Corrected Transaction column
• We update the starting balance of your next reconciliation, as we've removed a transaction
• We unreconciled and update the transaction so it's ready for you to check and reconcile again
• On the bank reconciliation page, we show the edited transaction with a Corrected label. This tells you that you edited this since it was reconciled

Refunds on a VAT return - Cash Basis scheme

If you are on the Cash Basis scheme and the refund shows on a VAT return, you can't edit or delete it. Reverse the refund instead.

Edit a refund

1. From Banking, open the relevant bank account.
2. From the Bank Activity tab, select the row to open the refund.
3. Change the bank account, method, date, and reference, as required.
4. Save your changes.

Change the amount

When altering the amount, ensure that the refund precisely matches the total of the allocated transaction.

1. Update the amount.
2. Untick the transactions allocated to the refund.
3. To allocate to a different transaction, select Outstanding from the Display drop-down list. This shows all outstanding payments on account and credit notes.
4. Select the transactions to allocate.
5. The total of the selected transactions must match the total amount of the refund. You can see this when the Left to Allocate box is zero.
6. Save.

Reverse a refund

If you use the Cash Basis scheme, and the refund shows on a VAT return, you can't edit or delete it.

Instead, enter the reverse transaction to clear the value from your supplier account and bank account and to update the VAT return.

Reverse a refund allocated to a credit note

This removes the refund from your bank account balance, updates the balance on your supplier account and updates your VAT return:

1. Create a new invoice with the same date, ledger account and amount as the credit note. This reverses the credit note.
   • From Purchases, choose Purchase Invoices, then New Purchase Invoice
   • Enter the details identical to the original credit note and Save
2. Pay the invoice. This reverses the refund.
   • Once the invoice saves, choose Record Payment. Make sure you select the same bank account
3. Enter a new credit note and refund with the correct details.

Once saved:

• The new payment in your bank account offsets the refund value. Reconcile it promptly to ensure correct balances
• The invoice and new payment on the supplier account negate the refund and credit note values
• The new payment shows on your next VAT return, cancelling out the previous refund
• Enter a new credit note and refund with the correct details

Reverse a refund allocated to a payment on account

To reverse the refund, create a new payment with identical details, updating bank, supplier account, and VAT return balances.

1. From Banking, open the correct bank account.
2. Select New Entry, then Purchase / Payment.
3. Select the Supplier Payment tab. Enter the supplier, bank account, payment method, date, amount and VAT rate. This must be the same details as the original refund.

4. Choose Save and select Yes to save as a payment on account.

Once saved

• The new payment offsets the refund on the bank account. Reconcile it promptly for correct balances before the next bank reconciliation
• The new payment shows on your next VAT return, cancelling out the previous refund