Changing VAT type on an invoice in a previously filed return whilst using FRS on a cash basis

Forum|Forum|1 month ago
July 13, 2026
1 reply
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We use QuickBooks Online Plus UK on the Flat Rate Scheme using the Cash Basis. We need to correct paid invoices in filed VAT periods because they were coded Exempt instead of No VAT. Intuit says to reverse and recreate the transactions. After creating the credit note and replacement invoice, should the credit note be applied to the original paid invoice, applied to the replacement invoice, or left unapplied? We need the correction to flow into the current VAT return without affecting bank balances.

QuickBooks Online

RazzieE

QuickBooks Team

The credit note needs to be applied to the original paid invoice, not the replacement invoice.

Since you're on a Cash Basis, this specific order ensures the correction hits your current VAT return without altering your bank balances or past reconciliations.

Link the Real Bank Payment to the Replacement Invoice:

Navigate to All Apps, then select Accounting and choose Chart of accounts.
Choose the account you used, then click Edit to open the original payment transaction. Uncheck the original invoice option.
Check the new replacement invoice, then select Save and Close.

Clear the Outstanding Balances:

Go to + Create, then click Receive Payment and select the customer.
Tick both the Original Invoice and the Credit Note.
Ensure the total payment amount equals £0.00, then click Save and Close.

If you have follow-up questions, please don't hesitate to click the Reply button.

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