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Shell2468
New Member
Oct 27, 2026 9:15 PM UTC
Question

wrong VAT code used

Hi 

Wrong Vat code used on 1 of 3 invoices to a customer. 20%standard vat was used whereas it should have been 0.0% zero rated as it was for a new build. Customer has submitted all their invoices to HMRC and this particular one has been rejected (not entirely sure on this process) 

Customer needs an amended invoice with the correct Vat code showing to resubmit to HMRC.

Invoice already paid by customer. Vat return for this period has already been submitted to HMRC

what is best course of action so the customer gets their invoice/we refund the customer (less than £400) and account for this with HMRC. Presumably any adjustments will show on the next Vat returns exception? Do I need to amend anything on the making tax digital? 
Thanks in advance for your help

1 reply

Lolly_NCQuickBooks Team
QuickBooks Team
Oct 27, 2026 11:56 PM UTC

The best approach is to issue a credit note for the original invoice and create a new invoice with the correct 0% (zero-rated) VAT code. Since the customer has already paid and the VAT period is closed, avoid editing or deleting the original invoice to prevent reconciliation issues. A credit note will effectively reverse the charge.

 

Here is how:

 

  1. Go to + Create and select Credit Note.
  2. Choose the same customer.
  3. Enter the same line items and amounts from the original invoice, using the original 20% standard VAT code.
  4. Select Save and close. This cancels the 20% VAT charge and preserves a clear audit trail.

 

Next, create a new invoice with the correct VAT code required for HMRC:

 

  1. Click + Create and select Invoice.
  2. Select the customer.
  3. Enter the same line items and amounts, selecting the 0% zero-rated VAT code for the new build.
  4. Select Save and send. Your client will need this document to resubmit to HMRC.

 

The customer now has a credit on their account from the original transaction. Refund them the £400 overpayment for the 20% VAT, then apply the credit note to clear the remaining balance.

 

Once corrected, resubmit the invoice to HMRC with supporting documents confirming the new build is zero-rated. For advice on your specific situation, check with HMRC or your accountant.

 

Please leave a reply below if you have additional VAT questions or concerns. We are always happy to help!

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