Credit notes - unique identifying number rule?

Credit notes - unique identifying number rule?

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Hi,

I've come across a question.A business is issuing credit notes to adjust the price on the original invoice, but is using the same document number as the invoice to which it relates.

I think that the credit note should have its own unique identifying number.

The HMRC website says only that the credit note should have an identifying number and date of issue, as opposed to its wording for an invoice which should have a number that is "unique". (INS12706).

The EU VAT directive articles 217-240 doesn't mention anything re credit notes specifically.

Can anyone add an opinion, or has anyone had a similar occurrence?

Replies (5)

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By DMGbus
12th Nov 2015 21:43

Xero experience

I raised a Credit Note in Xero last week and I noticed that it was automatically numbered the same as the relative invoice.

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Replying to BSSRoberts:
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By Cloudcounter
13th Nov 2015 08:44

Xero

DMGbus wrote:

I raised a Credit Note in Xero last week and I noticed that it was automatically numbered the same as the relative invoice.

I've never seen it do that either for our own accounts or in client records..  It normally just issues a credit note with the next number in the invoice sequence, Perhaps the options can be changed in settings, but again I've never found where you'd do it.

 

In response to the original question,  I'd just stick a C on the end of the invoice number to distinguish the credit note.  That way it has its own number and it's obvious which invoice it relates to

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By Astronaut
17th Nov 2015 13:14

Thanks for the responses. The issue with adding a "C" is that the software development to do that is quite expensive and the business understandably only want to do that if it is absolutely necessary. I've continued to search for a definitive answer to the legal aspect of the uniqueness but not been successful. Any further answers would be welcome.

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By Tim Vane
17th Nov 2015 13:18

If the software development cost to add a "C" to a credit note reference is quite expensive, then find another software developer.

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By Portia Nina Levin
17th Nov 2015 13:30

There is no requirement. The VAT regulations do not generally require that there be credit notes, so there cannot be any requirement for them to be numbered.

Credit notes are just the best accounting practice to evidence what has happened, and to ensure that the adjustments required by regulation 38 are made by both parties: http://www.legislation.gov.uk/uksi/1995/2518/regulation/38/made?view=plain

The only time a credit note is required by the regulations is when the liability of an invoice that has already been issued decreases as a result in the change of the VAT rate, or another change in the law that results from something becoming liable to VAT at a lesser rate, under regulation 15.

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