The Unrealised VAT functionality works well in Business Central until a company exceeds the threshold (£1.35m in the UK) and needs to move the the standard Accrual VAT model. When you switch off Unrealised VAT if you have any Sales/Purchase Invoices that have Unrealised VAT against them the system does nothing further with them.

This means that even when fully paid the Unrealised VAT remains Unrealised. A series of manual journals need to be carried out to create the correct VAT entries and journal the amounts between the relevant Unrealise/Realised VAT G/L Accounts.

There needs to either be a process that can be run across all or individual invoices to realise the VAT or even after switching off the functionality in the General Ledger Setup it should continue to realise the VAT when cash is applied to the outstanding invoices.