Hello there, @lubratt. I appreciate you sharing your workaround for categorising/recording VAT refunds in QuickBooks Online (QBO). 

Rest assured, I'm here to provide you with the best way to record the VAT refund in QuickBooks. This method eliminates the need to create a supplier credit with a value of £0.01.

Let me walk you through the steps for a seamless process:
 

1. In your QBO account, go to the Taxes tab, then select VAT (Take me there).
2. Select the All returns dropdown menu, then choose the specific VAT period you need.
3. Click on the View summary dropdown menu, then select Record Refund.
   
   
    
4. Select the bank account the refund has gone into.
5. Make sure you've selected Refund under Payment Type.
6. Enter the refund date and amount in the appropriate fields.
7. Add a memo if needed. Once ready, click on Save.
   
   
   
   

For detailed information, kindly visit: Record a VAT payment or refund in QuickBooks Online.
 

Furthermore, I recommend referring to this article that provides guidance on how to adjust your VAT liability using QuickBooks: Make VAT adjustments in QuickBooks Online.
 

I'll be here if you've got additional queries regarding taxes in QBO. It's always my pleasure to be of assistance. Take care.