Personally I would record it as a deduction against income. If the original was paid against an invoice then Sales Credit Note and paid from the bank against the customers account, which will nett it off.
If not then PAY from the bank against income, you'll get a warning pop up which you can ignore
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Yes, that crossed my mind too, but the latter transaction was decided in the latter year, so personally I think it's acceptable. What do others think?
Hi Jay/John
My only concern would be that you would now have the 2016/2017 turnover overstated by £800 and the 2017/2018 understated by £800 but in saying that as long as you can document the evidence showing the refund has been paid and was not a deliberate attempt to manipulate the turnover I would be happy to account for it by reducing 2017/2018 Income.
Would the £800 make a big difference to the accounts in both years, as in did they pay tax on this amount in 2016/2017?
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
Hi guys
Its a question of materiality so my understanding generally if not more than
0.5% of turnover
1% of total assets
5% of pre tax profits
= not material.
It fails on the last. How about the 1st?
Is just a paper exercise, but might be worth doing.
Interested in what Shaun would suggest.
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Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Hi guys Its a question of materiality so my understanding generally if not more than 0.5% of turnover 1% of total assets 5% of pre tax profits = not material.
It fails on the last. How about the 1st?
Is just a paper exercise, but might be worth doing.
Interested in what Shaun would suggest.
Hi Joanne
Didn't see your post when I replied was not trying to discount what you said its just that I am very slow at typing!
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
My only concern would be that you would now have the 2016/2017 turnover overstated by £800 and the 2017/2018 understated by £800
But has it been over/understated Doug?
at the end of the first financial the figure was correct. They've only refunded because the customer has kicked up a stink, and rather than face legal action, they've settled. That decision was taken in the second year and IMO should be reflected in the second year.
I could be wrong, but that's how I view it.
Thanks for the reminder on the materiality test Joanne, no doubt it fails on turnover as well. That only applies if the income shouldn't have appeared in the 16/17 accounts, yes?
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
As I said my only concern was that the refund had a direct link to events in the previous years accounts and the turnover, but if HMRC say that its fine then happy days.
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Doug
These are only my opinions of how I see things and therefore should not be taken as advice
The original invoice had been paid from what I can gather, so the client also needed refunding. Where would you have allocated the refund to? (I'm assuming this is a one off customer)
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John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
but some must be wrong 
