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Level 1

How do I enter a VAT-only supplier credit?

Supplier sent us an invoice with the wrong VAT rate (charged standard, supply should have been zero), supplier suggested that I pay the nett amount & they'd sort out a credit note when their accounts people came in on the Monday morning: payment had to be sent on the Friday evening because we needed the work doing there & then.


I've now got the credit note for the VAT & tried entering it as a supplier credit just like the help article for a VAT-only expense but I can't adjust the VAT amount. HELP!

QuickBooks Team

How do I enter a VAT-only supplier credit?

Hi there, @garethaethwy.


It seems that in this situation, it would be more appropriate to create a journal entry instead of using the supplier credit feature. A journal entry will allow you to adjust the VAT amount accordingly. 


Beforehand, make sure to delete the supplier credit. Then, follow these steps to create a journal entry for the VAT-only credit:


  1. Click on the +New button and select Journal entry.
  2. Enter the necessary details.
  3. Debit the appropriate expense account with the net amount of the credit note.
  4. Credit the VAT account with the VAT amount mentioned on the credit note.
  5. Ensure that the debits and credits balance out by adding any additional accounts if necessary.
  6. Select Save and close.


However, please remember that professional advice from an accountant is essential to ensure compliance with tax regulations and proper bookkeeping practices.


Additionally, you can make VAT adjustments in QBO to correct errors in VAT-related transactions in your accounting records. 


If you need further assistance or have any additional questions about recording adjustments, please don't hesitate to ask. We're always around to help.

Level 8

How do I enter a VAT-only supplier credit?

Hi @garethaethwy 


Unless you have already filed the VAT Return that covers the Bill date, simply enter the Bill in QBO with Zero Rate.  Use the Memo Field to add a brief explanation.

If you have paper copies of both the Bill & Credit, staple them together to that the VATman can see that it's the supplier's mistake.


(really the supplier should have raised a full credit or cancelled the original & re-invoiced with Zero Rate).


Sometimes it's easy to overthink ... real life is messy, suppliers/customers make mistakes with paperwork that are difficult to enter into QBO.  As long as the overall balances in QBO are correct & you can explain them if necessary, there is no need to replicate every aspect in QBO.


Hope this helps.

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