When a paid invoice has been included on a submitted VAT return, however, there is a mistake with the details or the invoice has been duplicated, you can make a correction by reversing this invoice and recreating a new invoice if necessary. 

This guide explains the reverse process for paid invoices if you are on an invoice accounting VAT scheme. You can check which type of scheme you are on within the Settings > Organisation > Details&Tax > Manage VAT schemes menu.

If you are on a cash accounting VAT scheme, you can view the guide below:

Reversing a paid invoice on a cash accounting VAT scheme

Step 1.

Head to Sales > Invoices and click on the Paid tab.

Step 2.

Click on the invoice number that needs reversing.

Step 3.

The quickest process to reverse the invoice is to either delete or deallocate the payment from the invoice, apply a credit note and then create a new invoice if necessary.

In this case, I will be deallocating the payment. Under the Payment history table at the bottom left of the menu, click on the Deallocate link and confirm once prompted. 

Step 4.

You can now reverse the invoice by applying a credit note. Beside the Payment history table click on the Credit tab. Add a date and description and then hit the Apply credit note button to complete.

Step 5.

Once the invoice has been reversed a new copy of an invoice can be created with the corrections and payments made as necessary.

Please note: Both the reverse invoice and the corrected invoice will need to be included in a future VAT return.

To apply the deallocated payment to the new invoice, click on the Allocate payment button when viewing the new invoice.

Step 6.

Select the appropriate payment and then enter the amount to allocate beside the appropriate invoice. 

Finally, hit the Allocate button to complete.