Finance | Project Operations, Human Resources, ...

UK VAT direction on write off journal

(0) Share

Report

Posted on by Dave C Eng

Hi,,

Our AP team spotted an issue when we use a customer write off journal. The VAT posting goes to the GL account for VAT Outputs (payable) but the VAT transaction is marked with the VAT direction VAT receivable

GL account in the write off journal

VAT detail

This doesn't seem to follow the MS documentation which states if journal contains a line of type customer it will follow this flow https://docs.microsoft.com/en-us/dynamics365/finance/general-ledger/sales-tax-calculation-on-general-journal

I have found a work around which causes it to switch to VAT payable but I want to understand what is causing it to pickup the right GL account but wrong VAT direction. The workaround is on the VAT line in the journal select the General tab and switch the "VAT direction" switch to "Yes"

Thanks

Dave

I have the same question (0)

All responses (3)

Answers (0)

Sort by

Suggested answer

saurabh bharti 15,055 Moderator on at

Like (0)

Report
Copy link

Link copied!

This looks to be because it is kind of reversal, so when we posted customer invoice it was in VAT receivable with receivable direction but when we write-off it goes to liability which is VAT payable but with same direction as source.

Was this reply helpful? Yes No
Dave C Eng on at

Like (0)

Report
Copy link

Link copied!

Hi Saurabh,

For UK VAT in most cases Customer invoices would go into VAT payable (it is a account receivable to us but the VAT on the transaction we must pay to HMRC i.e. VAT payable)

I don't think it makes sense for a reversal of a transaction to use a different VAT direction to the original transaction it's just creating a mismatch between the GL and VAT subledger meaning they no longer reconcile.

Thanks

Dave

Was this reply helpful? Yes No
Suggested answer

saurabh bharti 15,055 Moderator on at

Like (0)

Report
Copy link

Link copied!

Hi Dave,

Agreed but i recall same issue faced earlier in VAT 100 report with this direction. That time it was mentioned as bug by MS support. May be you can reach out to them again.

Was this reply helpful? Yes No