Dynamics Community Forum Thread Details

Incorrect tax on posted Sales Credit Memo Return Prepayment scenario

URGENT: Incorrect tax on posted Sales Credit Memo Return Prepayment scenario

We encountered a serious issue in Dynamics 365 Business Central related to returns with prepayments.

Scenario:
Sales Order was created with 100 percent prepayment
Posted Prepayment Invoice exists
Final Posted Sales Invoice exists
Return was processed using Sales Return Order
During posting, Business Central created a Posted Sales Credit Memo with incorrect tax

Original posted invoice:
Total Excl Tax 1196.00
Total Tax 98.67
Total Incl Tax 1294.67

Posted Sales Credit Memo incorrect:
Total Excl Tax 1196.00
Total Tax 116.61
Total Incl Tax 1312.61

Difference:
17.94 extra credit caused by incorrect tax calculation

Problems:
The credit memo is already posted and cannot be edited
There is no Cancel or Correct option available on this posted credit memo
Reverse Transaction is not allowed only works for journal entries
Deleting is not a valid accounting solution
Creating additional credit memos results in duplicate customer credit which is not acceptable
Customer is receiving a replacement product not a refund

Additional behavior:
Creating a corrective credit memo from the posted invoice in sandbox sometimes works
In some cases posting fails with error Prepmt Amt to Deduct Excl Tax cannot be more than 0

Questions:
What is the officially supported way to correct or neutralize a posted Sales Credit Memo with incorrect tax
Is it possible to cancel a posted Sales Credit Memo in Business Central
In a scenario with both prepayment and final invoice what is the correct sequence of documents when customer receives replacement no refund
How to avoid duplicate customer credit in this case

Environment:
Dynamics 365 Business Central US
Prepayment used
Return processed from Sales Return Order

Categories:

Dynamics 365 Business Central

Hello,

Officially, once that Sales Credit Memo is already posted, you can’t edit, delete, cancel, or “correct” the posted credit memo itself the way you can with an unpaid posted invoice; Microsoft’s supported path is to create a new corrective sales document to offset it, and because prepayment is involved, Microsoft also says the prepayment must be corrected/canceled too. So in your case, the supported accounting fix is not to try to reopen the posted credit memo, but to post a balancing sales invoice or sales order/replacement flow that neutralizes the wrong credit amount, then make sure the prepayment credit/invoice sequence is handled correctly. For a replacement with no refund, the clean process is usually: process the return against the original posted invoice/return order, then create the replacement sale/shipment so customer balance nets correctly, rather than issuing extra standalone credit memos. If BC produced the wrong tax on the posted credit memo in this prepayment-return scenario, that looks like either a product defect or a bad edge case, but the supported correction is still through new documents, not changing the posted one.

Regards,
Oussama Sabbouh

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