Debit note

What it means

A debit note is a correcting document that increases the amount originally invoiced - for a larger delivery discovered later, a price set too low, or a contractual top-up. A credit note works the other way.

For VAT it is a correction increasing the taxable amount. It must reference the original invoice and state the difference in amount and tax, not a new total.

A debit note corrects a supply that has already taken place. If the customer receives further goods or services that were not part of the original delivery, this is not a correction but a new supply with its own invoice and its own tax point.

How it works in practice

For the customer it increases a payable, for the supplier a receivable, and it is matched to the original document in the records. In the control statement it belongs in the corrections section on both sides.

Which period the correction belongs to follows the VAT Act rules on correcting the taxable amount - not when the error was noticed.

A common case: a contract for work allows the price to rise when the scope changes and the client approves the change in a signed record. The supplier issues a debit note against the original invoice, and in the books we attach the approved schedule, which evidences the reason for the correction in an audit.

What to watch out for

A debit note is not a device for raising a price unilaterally: it must rest on the contract or on a genuinely larger supply. Without agreement the customer objects with good reason, and the document stays unpaid and unmatched on both sides.

A debit note has its own due date, which must be stated on the document. If the supplier leaves it out or sends the document without proof of delivery, in a dispute over late-payment interest it is hard to show from when the customer has been late in paying the difference.