Once an invoice has been reported in a return, the way to correct it downward is a credit note, not a deletion. This matters because credit notes carry a time limit that invoices do not, and businesses that settle disputes slowly frequently discover that their right to adjust the tax has already expired while the commercial obligation to refund the customer has not.
Which note, and when
| Situation | Document |
|---|---|
| Goods returned by the customer | Credit note |
| Price reduced after supply | Credit note |
| Deficient supply, or a post-supply discount agreed in the contract | Credit note |
| Value or tax understated on the original invoice | Debit note |
| Invoice raised in error, never reported, no supply took place | Cancel it — no note needed |
A debit note has no equivalent deadline, for the obvious reason that it increases your liability rather than reducing it.
The deadline that catches people
A credit note must be declared by 30 November following the end of the financial year to which the original supply relates, or the date of filing the annual return, whichever is earlier. Declared after that, it no longer reduces your output tax.
That is the trap. A dispute over a March invoice settled in the following January leaves you commercially obliged to credit the customer, with no ability to recover the GST you already paid on it. Settle disputes inside the window, or price the tax into the settlement.
The recipient has to act too
A credit note is not one-sided. Where the recipient has already claimed credit on the original invoice, they must reverse the corresponding amount. If they do not, the adjustment does not hold and the mismatch surfaces in reconciliation.
This is why credit notes should be communicated, not merely issued. Under the invoice management system the recipient acts on documents as they appear, so a note issued without a conversation tends to be rejected or ignored.
One important limit: a credit note cannot reduce your liability where the tax has been passed on and the incidence has not actually been borne by you — the unjust-enrichment principle that also governs refunds.
Where we come in
We track the November window against open disputes so a settlement is not agreed after the right to adjust has expired. Part of the GST services cycle.
This article is general information, not professional advice. Limits, rates and dates change by notification — confirm the position for your own year before acting on it.