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In Business Central Accounting Setup, we are able to choose if we want to calculate VAT on client discounts (when they pay quick, a % is granted). Such setting affects as well the payment differences (payment tolerance).


In fact, when a client pays less than the invoice, we are able to automatically book the difference in a G/L account which is great. However, if you check the postings, there is VAT that is generated (correction of vat to be paid), based on the inital invoice.


In a fiscal point of view, this is not correct.


In fact, when a clients does not pay the right amount (because of bank fees, error) this is not a reduction of the income, so no VAT should be generated at all.

However, when client pays the amount in the discount period, then VAT should be corrected because this is a reduction on the income.

The problem with the actual development is the fact that our clients are not able use the option to validate the difference on the P&L, because this generates VAT.


My proposition would be to have the ability to choose if we would like the VAT to be generated for payment discounts AND payment differences, in a separate boolean.

STATUS DETAILS
Needs Votes
Ideas Administrator

Thank you for this suggestion! Currently this is not on our roadmap. We are tracking this idea and if it gathers more votes and comments we will consider it in the future. Best regards, Business Central Team

Comments

M

Compliance risk. The current functionality does not comply with HMRC VAT regulations and places all UK users at risk. The functionality needs to be improved per the suggestion. Removing the functionality all together would be a significant reduction in functionality/user experience.

Category: Financial Management