VAT credit note

New rules for credit notes came into effect in September 2019.

Find out more about VAT credit notes and how they affect you.

You are more likely to reduce the price of goods than increase them, for example if the goods are faulty.

Credit notes can reduce the VAT accounted for on the original invoice.

VAT credit note

Since 1st September 2019 you can only reduce the output VAT on your VAT return if you have made an actual refund.

This could be making a payment to the customer, or offsetting the credit against other invoices.

The new rules also state that you must issue a credit note to the customer within 14 days of giving a refund.

Please ensure that you issue the refund and credit note in the same VAT period as the invoice.

If both you and your customer agree, you can issue a credit note without adjusting the original VAT charge.

This can be beneficial if the customer is able to fully claim input tax on the sales invoice.

If you increase the cost of the goods you must issue a debit note to your customer within 14 days of the date of agreeing on price change.

Failing to issue a debit or credit note within these limits is a mistake that needs to be corrected under the error correction procedures.