This is general information, not tax or legal advice. Rules and rates change, so check GOV.UK or ask an accountant.
A credit note is a document that reduces or cancels an invoice you have already issued. It leaves a clear trail, which is why it is better than deleting an invoice.
When to issue one
- You invoiced the wrong amount, product or customer.
- Goods were returned or work was not completed.
- You agreed a discount after invoicing.
- You are writing off a bad debt. See bad debts.
What to show
- The words “credit note” and a unique number.
- The date and the original invoice number.
- Customer details and what is being credited.
- The amount and the VAT, if charged.
VAT
If you charged VAT on the original invoice, the credit note reduces the VAT you owe for the period it is issued, so it matters for your return. Check GOV.UK for the details.
Keep the customer’s balance right
Credit only what is needed, add a note explaining why, and check the credit note date falls after any lock date. If you refund money, record the refund so the customer’s balance is correct.
Why not just delete the invoice?
Deleting removes the evidence and can leave gaps in invoice numbering. A credit note keeps both documents. See delete or correct an invoice.
How AvrioBooks helps
Create a credit note from an invoice or a bill with More > Create credit note. It copies the lines, so you edit them to credit part of the original, and it is linked to the original and posted to reduce receivables and tax figures. See credit notes and invoicing software.
Frequently asked questions
What is a credit note?
A document that reduces or cancels an invoice you have already issued.
Should I delete the invoice instead?
Usually not. A credit note keeps a clear audit trail and invoice numbering intact.
Does a credit note affect VAT?
Yes. If VAT was charged, the credit note reduces the VAT you owe for the period it is issued.
How do I create one in AvrioBooks?
Open the invoice or bill and choose More, then Create credit note. Edit the lines to credit part of it.
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