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Dynamics 365 Community / Forums / Small and medium business | Business Central, N... / Unrealised VAT - Credi...
Small and medium business | Business Central, N...
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Unrealised VAT - Credit Memos

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Posted on by Sue Westlake 149
I have setup unrealised VAT which is working perfectly for invoices and payments.  However the client does not want Credit Memo's to recognise the VAT when the Credit is applied to the invoice.  In their industry the credit memo is not deemed as a payment - it is just a reduction in the invoice amount and should therefore be excluded from the calculations.  
 
Is there any method to exclude credit memo's ?
 
 
  • Kenneth Q Madsen Profile Picture
    Kenneth Q Madsen 27 on at
    Unrealised VAT - Credit Memos
    Are you using the Correct, Cancel or Create Corrective Credit Memo function? Because even if you have changed your posting groups etc. on the customer, this will copy that issued invoives setup. In this case, you would have to Using the Create Corrective function will allow you to change it before posting, where you will need to select your new setup for the open Credit Memo.
     
    I am curious though - it sounds weird, and I am not sure I have understood the question completely. And if I have, I find it strange. What happens when your client "cancels" a sale?
     
    I will for this example assume your client has 25% VAT, since it's the standard of my country.
     
    1. We have a sale for 100 revenue + 25 VAT = 125 in total
    2. Credit the initial invoice, but from what you say, this will just be 125 cost, since credit should be without VAT?
    This would mean we have 100 + 25 VAT in sales. Minus 125 for the credit memo, resulting in a net loss of 25 for your client, because he has to reconcile the 25 VAT on the sale.
     
    Can this really be so?
  • Sue Westlake Profile Picture
    Sue Westlake 149 on at
    Unrealised VAT - Credit Memos
    Thanks for the response but unfortunately this does not work.  I setup a new vat product posting and vat business posting groups and used these on the credit memo.  But when the credit is applied to the invoice it posts to the VAT Ledger using the original invoice posting groups and therefore incorrectly appears on the vat return.
     
     
     
     
  • Suggested answer
    KasparsSemjonovs Profile Picture
    KasparsSemjonovs 4,011 Super User 2024 Season 2 on at
    Unrealised VAT - Credit Memos
    In standard it could be achieved only by manually changing the VAT Posting groups in the Credit Memo to have a separate combination of Business and Product posting groups, that would indicate a VAT of 0%.

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