Hi Phil

This sounds like part of the charge has been cancelled, so your supplier should have issued a credit note along with the refund.  Enter this (or a dummy credit note if you don't have one), using the same nominal/department codes as the original invoice.  You can then post a supplier refund from the bank screen, select the supplier and match it against the credit note.

Sorry but could I just clarify a few points? The original invoice was for 600 and then, after reconciliation, a refund was issued, by the supplier, of 200. When I post a purchase credit to reverse the invoice, should the amount field show 600 or 200? Then when I post a supplier refund to reverse the purchase payment, should the refund field show 200 or 400?  I am unsure as to whether the first transaction deletes the original invoice and then the second transaction shows the payment as 400. I hope this makes sense and await your response.

The original invoice would have been posted as an expense of £600 and a supplier payment of £600, presumably matched off and cleared.  You now need to post a credit note of £200, then post a supplier refund of £200.  This does not alter the original transactions, so you should see both the £600 payment and £200 refund on your bank statement as well as on the supplier record.  I hope that makes it clearer for you.