The easiest way to reconcile a refund on Xero is as a reverse of the entry that reconciled the original purchase. In other words when we reconcile the refund we can use the following:

• Who: The name of the supplier you used to record the original purchase.

• What: The account category you used for the original purchase.

• VAT Rate: The same VAT rate that was used.

The transaction will then show up in the relevant account category and a credit with the correct VAT.