Sales tax direction for Bad Debts posting

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Posted on by Pratik Bhosle

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Hello Experts

I am reaching out to you guys as I could not find anything similar forum that can answer my query.

The scenario here is : I have to write off customer bad debts for that I pass a journal entry Dr. Bad Debts and Cr. Customer. However, VAT direction for this defaulted to 'Output VAT' where as in theory we are claiming back from the authority and i would like that to be appeared as 'Input VAT'. I have tried posting with different scenarios but they all seem to be posting into 'Output VAT' as credit.

Is there any way i can hold bad debts under INPUT VAT ?

Please let me have your opinion.

Thanks

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Pratik Bhosle 412 on at

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RE: Sales tax direction for Bad Debts posting

Found the solution :

Step 1 – General ledger parameters tick the check box for tax direction requirement.

Step 2 – Update on main accounts under set up that require any specific vat directions

Step 3 – appears on posting exactly what’s set up on main accounts.
Pratik Bhosle 412 on at

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RE: Sales tax direction for Bad Debts posting

Hi Sheela,

Thanks I have already checked that but I use AX2012 CU9 and i don't really see much benefit.

What that parameter does ? Does this allow change vat direction on transaction ?

Does it require any further configuration to validate that parameter ? How does this exactly work, can you please provide example.
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e_zhu 44 on at

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RE: Sales tax direction for Bad Debts posting

Hi Prathik,

If you mark the parameter Tax direction requirement, you will be able to achieve this.

Thanks,

Sheela- Support Engineer- D365- F & O
Ludwig Reinhard Microsoft Employee on at

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RE: Sales tax direction for Bad Debts posting

Hi P B,

Agree with this workaround.

Might be the easiest way and avoid a development.

Can you finally please verify the answers by clicking Yes on the ones that helped?

Many thanks for your support and best regards,

Ludwig
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Pratik Bhosle 412 on at

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RE: Sales tax direction for Bad Debts posting

Hello Ludwig

This type of transactions are few therefore I would prefer dummy supplier solution as we do not want any further development. I would now close this thread as workaround.
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Ludwig Reinhard Microsoft Employee on at

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RE: Sales tax direction for Bad Debts posting

Hi PB,

If your client insists on that then I would say that this looks like a feasible workaround.

The main pain point is the posting step no 2 where you probably have to manually settle the lines between the dummy supplier and the customer.

If you have only some cases for which this is needed then users can do it manually.

Otherwise, some kind of coding might help accelerating the job.

Please let us know if there is something else the community can help you with.

Otherwise, it would be great if you could verify the answers to get this thread completed.

Best regards,

Ludwig
Pratik Bhosle 412 on at

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RE: Sales tax direction for Bad Debts posting

Hello Sourav / Ludwig

First of all thank you for your time and patience and apologies for the delay in replying.

I am still working on the case and have challenged client too, but there is a compliant by local government and you are not suppose to declare as OUTPUT VAT. In that case I have found two work around :

1) Posting journal straight to nominal code by transferring from one to another - this is the last option that i would like to use.

2) Using dummy supplier as intermediate to settle between creditor and debtor e.g

Posting 1 - General Journal

Dr. Bad Debts

Cr. Supplier (instead of Customer) this way i get INPUT VAT on bad debt transaction

Posting 2 - Use same general journal add new line

Dr. Supplier

Cr. Customer

Last mark the settlement between sub-ledgers to clear open items.

I am not sure how the 2nd solution will work, it adds up extra line to user but solve the purpose without touching nominal code.

Please advise whether it's doable ?

Thanks

PB
Ludwig Reinhard Microsoft Employee on at

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RE: Sales tax direction for Bad Debts posting

Hi P B,

Have you been able to get this issue resolved?

Is there anything else this community can help you with?

Would be great if you could keep us updated.

Many thanks and best regards,

Ludwig
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SouravDam 11,723 on at

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RE: Sales tax direction for Bad Debts posting

Hello P B,

Any progress on this case please?

Best regards,
Sourav Dam

Kindly mark this thread 'Yes' if this is answered your query which may help other community members in this forum.
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Ludwig Reinhard Microsoft Employee on at

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RE: Sales tax direction for Bad Debts posting

Hi PB

I would suggest challenging the client on that one and asking to get a confirmation by their tax auditor/advisor before considering to make a change here.

best regards

ludwig