diff --git a/C4/Circulation.pm b/C4/Circulation.pm
index 0cedf80d9c..7ff18f078b 100644
--- a/C4/Circulation.pm
+++ b/C4/Circulation.pm
@@ -2001,6 +2001,9 @@ sub AddReturn {
                 "UPDATE branchtransfers SET datearrived = now() WHERE itemnumber= ? AND datearrived IS NULL"
             );
             $sth->execute( $item->itemnumber );
+
+            # If we are completing a transfer we should not generate a new transfer from return policy
+            $returnbranch = $branch;
         } else {
             $messages->{'WrongTransfer'}     = $tobranch;
             $messages->{'WrongTransferItem'} = $item->itemnumber;
diff --git a/t/db_dependent/Circulation/Branch.t b/t/db_dependent/Circulation/Branch.t
index dfd65d33d2..e4a9f316a5 100644
--- a/t/db_dependent/Circulation/Branch.t
+++ b/t/db_dependent/Circulation/Branch.t
@@ -25,7 +25,7 @@ use Koha::CirculationRules;
 
 use Koha::Patrons;
 
-use Test::More tests => 14;
+use Test::More tests => 15;
 use t::lib::Mocks;
 use t::lib::TestBuilder;
 
@@ -295,6 +295,12 @@ $dbh->do( $query, {}, $borrower_id1, $item_id2, $samplebranch2->{branchcode} );
     $samplebranch2->{branchcode});
 is( $messages->{NeedsTransfer}, $samplebranch1->{branchcode}, "AddReturn respects branch return policy - item2->homebranch policy = 'holdingbranch'" );
 
+# Generate the transfer from above
+ModItemTransfer($item_id2, $samplebranch2->{branchcode}, $samplebranch1->{branchcode}, "ReturnToHolding");
+# Fulfill it
+($doreturn, $messages, $iteminformation, $borrower) = AddReturn('barcode_2',$samplebranch1->{branchcode});
+is( $messages->{NeedsTransfer}, undef, "AddReturn does not generate a new transfer for return policy when resolving an existing transfer" );
+
 # item3 should not trigger transfer - floating collection
 $query =
 "INSERT INTO issues (borrowernumber,itemnumber,branchcode) VALUES( ?,?,? )";