Example scenario:

An insurer pays us for a gift card (which in our case is provided by a third party and processed on the third party's portal). The receipt of these monies triggers the tax point for us to be liable to HMRC for the vat. We envisage uploading a general journal into D365 to record the receipt of this payment and the vat.

The insurer gives the gift card to one of their clients who has made a claim on their insurance policy (the gift card may only be spent in one of our stores).

The customer then comes into one of our stores to place a sales order and pays using the gift card. Unlike other tender types we don't want vat entries to be created from the gift card payment which would typically be posted as a prepayment as we would normally have to prepare or order the product for subsequent delivery and or fitting.

The order is then fulfilled and invoiced which will create the usual vat output entries. At this point in time we would be double counting the vat so we would need to monitor the invoiced sales and reverse the corresponding vat entries which we created from the initial payment from the insurer.

Unfortunately, it would appear from standard D365 that we will have no option but to create vat entries when the gift card is used as payment against the order and at that time monitor gift card tender payments in order to reverse the vat entries we initially created.

I appreciate I have outlined the issue rather contributing with an idea but it would be good to know whether other D365 encounter a similar issue and have to work around the problem in D365.