AX 2012 R3 RTM Posted VAT behaviour

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Posted on by Dominic Sheard

Hello,

I am trying to understand the behaviour of posted TAX in AX 2012 R3 RTM. Is there any papers that explain the difference between tax posting between general invoice on a purchase order or doing it through invoice register (which is how we do it).

Our Financial Controller, when investigating tax in the system using the "Posted Tax" form, thinks the way the system is doing it is wrong, because the purchase order should not enter the equation and that it should just be the invoice and voucher, so I wanted to explain to them what is going on.

Is this balancing out the purchase order and purchase invoice and then posting it to the voucher?

If you do a invoice on the purchase order without any register you get it like this (not the way we do it, but there is no voucher or purchase invoice classed in this posting).

Thank you.

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David Bader on at

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Hi Dominic,

I see you are working with European VAT on this issue.

As I am in the US I am not familiar with this VAT. Hopefully one of the community members that has VAT knowledge will be able to chime in and provide some guidance. If not, I will see if we can locate a Microsoft individual to help.

Have a great day!

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André Arnaud de Cal... 300,911 Super User 2025 Season 2 on at

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Hi Dominic,

Can you explain what the financial controller means with "wrong"? You shared screenshots, but I'm not able to understand what you shared and what is wrong here. I don't see VAT amounts, but what are you exactly expecting? Please provide some more background information.

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Ludwig Reinhard Microsoft Employee on at

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Good morning Dominic,

Can you please elaborate on a comprehensive example?

I cannot understand the issue that you have based on the information provided.

Also, please describe your process how your record invoices and when and how you currently post VAT.

Some additional screenprints would help.

Many thanks,

Ludwig

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Dominic Sheard 5 on at

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Hi Ludwig,

I am wanting to understand the posting tax transaction in the first screenshot.

I'll get more information when I am back at work on Monday from the Finance Controller, but from what I gathered, they seem to think that the "purchase order" does not need to be in the "Posted Tax" when we report on it, because when working out the tax (regardless if it's standard or zero-rated), it's what we are invoicing that should be taken into account, not the purchase order.

I thought it was doing some transaction balancing when performing invoice register, so wanted to see if someone could explain to me that is what the system is doing, so I am not just making it up when I report back to them.

After the invoice register but not approved there is only one posted transaction to Posted VAT and that is the voucher.

Once three-way matched and approved, the invoice is posted to the vat with the purchase order

I am looking for an explanation of what is going on with the posting - is it just balancing itself out the purchase order and purchase invoice and having just the voucher be the VAT?

Thank you,

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André Arnaud de Cal... 300,911 Super User 2025 Season 2 on at

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Hi Dominic,

At time of the approval posting, it will reverse the register with reversed amounts and creates a new entries for the final invoice. It is done in this way as there could be a small difference between details posted during the register and the approval.

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Dominic Sheard 5 on at

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Hi André,

Thank you for replying to my question.

So when the approval is posted, the "Voucher" from the register is reversed. Is that what the "Purchase Invoice -56,000" is? Or do we not see that reversal happen in the Posted Tax section? What is the relevance of the "Purchase Order" at 56,000?

Sorry if I am overcomplicating things - want to make sure I am explaining it right to them.

Thanks again.

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Ludwig Reinhard Microsoft Employee on at

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Good morning Dominic,

In the AP parameter form you can define whether the sales tax shall be posted at the time you register the invoice or at the time you approve and post the PO invoice. (see ledger and sales tax parameter - sales tax section).

Depending on the choice made tax will be posted.

Some companies prefer to take the VAT as soon as possible when they register invoices because this can give you and advantage from a cash flow perspective.

Others like the more conservative approach and post the tax later once everything is approved and ok.

If you post the VAT at the time of the invoice registration then this tax posting will be reversed at the time you post the 'final' invoice for the PO. There is thus no double tax posting or double counting.

Please double check yourself by recording some demo/test invoices in the MS demo/standard companies.

Best regards,

Ludwig

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Dominic Sheard 5 on at

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Hi Ludwig,

Thank you for the extra information.

I will try testing the settings for VAT posting in our test system when back at work tomorrow. I will also be able to come back with more information from the Finance Controller as well.

Thanks again!

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Dominic Sheard 5 on at

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Hi Ludwig,

I have spoken to the Financial Controller and had the below reply.

When looking at our AX VAT transaction report which I am using for our statutory VAT submissions I can see entries being generated that appear to be irrelevant and on closer inspection have generated a variance to what should be recorded.

In terms of critical path for a purchase invoice that is being 3 way matched to a purchase order I believe the following happens in generating records for the VAT transaction report –

A purchase invoice is recorded on AX generating a voucher. This voucher records the invoice value and the VAT value

The purchase order is 3 way matched to a purchase order

The original voucher is reversed out

The Purchase order then posts to the VAT report the purchase order value and imputed purchase order VAT value

The purchase order should not replace the invoice value as it is not a VAT document.

I could understand if the posted invoice voucher were replaced by the authorised invoice in case any amendments were needed before paying but this is not the case, it is the purchase order posting the final values.

The above is one example of a posting from the Posted Vat form, which the report uses as its datasource in AX (purchase order with multiple charges added in this example) and the invoice and the voucher. What the Financial Controller is after is why those purchase orders are in the Posted Vat report, what is their function in the transaction, should it not just be Purchase Invoice?

Cheers,

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Ludwig Reinhard Microsoft Employee on at

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Hi,

I think there is a slight misconception here.

For No 1 you pre-record an invoice.

Such a pre-recorded invoice should then go into an approval workflow.

Once it is approved, the very same invoice is then used an matched against the PO product receipt and posted.

You are thus not posting a purchase invoice in step 1 and then a purchase order in step 4.

It is a single multi-step invoice posting process.

In this process you can define the time the tax posting is made.

Either at the time of pre-recording (step 1) or after the approvals are made and the product receipts are matched.

Depending on this choice, you might see a reversal of the tax posted in step 1.

Best regards,

Ludwig

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