Correct transactions included on a VAT return

To correct an error on your VAT return, you'll need to reverse the transaction. You'll then re-enter it with the updated details.

For transactions included on draft VAT returns, delete the draft. Once you've done this you can amend or delete the transaction.

How this works

Having an incorrect transaction can mean that:

• Your bank account balance is not correct
• The balance of your customer or supplier account is not correct
• Your VAT return is not correct, and you may overpay or underpay VAT

To make the necessary adjustments, you must:

1. Create a reverse or opposite transaction. This effectively cancels out the value of the incorrect transaction.
2. Re-enter the transaction with the correct details, if required.

See an example >

You enter a payment for £120 for some office supplies twice by mistake. You don't notice this straight away and it's now included on a VAT return.

• Your bank account balance is now £120 less than it should be
• You've declared an extra £20 on your VAT return
• When you report on office supplies purchases, it is £100 more than expected

To make sure your bank account and VAT return are correct, you Enter a refund for a sale to reverse this. You use the same date, amount, category, and VAT rate.

• Your bank account balance increases by £120 and is now correct
• Your next VAT return gets adjusted by £20
• Your office supplies are now £100 less and are correct

 NOTE: Any corrections that you make will appear when you create your next VAT return.  

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Which transaction to use

• Reverse money out with a refund for a purchase
• Reverse money in with a refund for a sale
• Reverse a customer receipt with a customer refund
• Reverse a refund with a new customer receipt
• Reverse a bank transfer with another opposite bank transfer

Reverse money out >

To make the necessary adjustments:

• Create refund to reverse the receipt. This creates an opposite transaction
• Re-enter the transaction with the correct details, if required

Once saved the refund shows on your next VAT return, reversing the original receipt.

1. From Banking, choose the relevant bank account.
2. Select New, then Money In.
3. Choose the Enter a refund for a purchase link. This is located just under the contact details.
4. Enter the details of the transaction you want to reverse.

Reverse money in >

To make the necessary adjustments:

• Create a refund to reverse the receipt. This creates an opposite transaction
• Re-enter the transaction with the correct details, if required

Once saved the refund shows on your next VAT return, reversing the original receipt.

1. From Banking, choose the relevant bank account.
2. Select New, then Money Out.
3. Choose the Enter a refund for a sale link. This is located just under the contact details.
4. Enter the details of the transaction you want to reverse.

Reverse a customer receipt >

Do this when you use Cash Accounting VAT scheme, and you've included the receipt on a submitted VAT return.

The refund clears the value from your customer account and bank account. It also updates the VAT return. The sales invoice now shows as Unpaid.

1. Create a refund with the same details as the receipt.
2. The sales invoice now shows as Unpaid. Create a new receipt to pay the invoice if required.

Reverse a refund >

If you refund a paid invoice in error, just enter a new receipt to pay the original invoice. This will add the amount of the receipt back into your bank account.

This ensures that your bank account and customer records are correct. The receipt will show on your next VAT return.

Reverse a bank transfer >

Here you simply enter the transfer in reverse. This cancels out the original transfer. You'll still see both transfers in your bank reconciliation and Activity list.

1. Go to Banking, then select New, and Bank Transfer.
2. Enter details of the transfer. You must enter:
   Paid from Bank Account - the bank money was originally transferred to.
   Paid into Bank Account - the bank the money was originally transferred from.
   Date Transferred - use the same date as th original transfer you're correcting.
   Amount Transferred - use the same amount that was transferred.
3. Click Save.