VATREC13131 - Credit and Debit notes: Dealing with problem cases:

The example scenarios in this section cover some of the commonly encountered problems involving credit notes and give guidance on how to deal with them.

There are different circumstances in which a VAT adjustment needs to be made following a change in the original consideration or the cancellation or correction of an invoice. Where a VAT adjustment is necessary it is vital that both the supplier and customer make the same adjustments. Most difficulties arise because output tax is decreased but there is no adjustment to corresponding input tax.