If the customer paid all of the original invoice, you will need to create a credit note for them. When you sent this payment to them, you will issue a refund against the credit note
You could post the refund as a bank payment, debiting the net to sales BUT the net and VAT would pick up in the purchase boxes of the return, instead of the sales boxes. You would have to manually adjust the return figures printed out by sage
So lets say you did a bank payment for £100 + £20 vat
This would increase your input VAT by £20 and your net purchases by £100
You would need to
Reduce the input VAT by £20
Reduce the net purchases by £100
Reduce the output vat by £20
Reduce the net sales by £100
The net liability would not be affected, you are simply shifting the figures to the correct position.
It goes without saying.... Be sure to take a print out of the Sage VAT return and right notes on it to explain what you have done. Keep that on file somewhere, for future reference :)
