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.

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.