Setup considerations for the “Amendments to VAT on Prompt Payment Discounts” update for the British version of Microsoft Dynamics NAV 2013, 2013 R2, and 2015
This is an addition to the release note for the Amendments to VAT on Prompt Payment Discounts update for the British version of Microsoft Dynamics NAV 2013, 2013 R2, and 2015.
The Amendments to VAT on Prompt Payment Discounts update is based on the Adjust for Payment Discount feature, which is already part of the W1 and GB versions. However, this feature is typically not used in the GB version. Therefore, this blog post provides some information about the Adjust for Payment Discount feature.
In earlier designs, VAT was already deducted when posting the invoice. In the current design, VAT is “adjusted” if the payment discount is deducted. “Adjust” here means that the VAT included in the payment discount amount is calculated and posted and therefore reduces the sales VAT. This happens only if the open invoice is applied by a payment within the payment discount period, or before or on the payment discount date of the invoice.
You enable the Adjust for Payment Discount feature by selecting the Adjust for Payment Disc. check box on the General Ledger Setup page. Then you must enable the Adjust for Payment Discount feature for every VAT Posting Setup record where it must be used. On the VAT Posting Setup page (472), the Adjust for Payment Disc. field is not visible. So the user must add it with the Show Column function, or open the VAT Posting Setup Card page (473).
Be aware that when you have set up the Adjust for Payment Disc. feature, the G/L accounts for payment discount now come from the General Posting Setup page, not from the Customer Posting Group and Vendor Posting Group pages. Also, VAT for the payment discount tolerance and the payment tolerance is handled in the same way as for the payment discount. Also, when you apply an open invoice where the given VAT posting setup is used (within the payment discount period and/or payment discount tolerance period), then the payment discount is considered and the VAT will be adjusted. It is important that you select Payment (Refund for credit memos) as the document type on the applying entry.
Also be aware that the general ledger entries of the payment will look a bit different than before. You will find more general ledger entries, more VAT entries, and more detailed customer and vendor ledger entries. Also, the way the detailed customer and vendor ledger entries are created is different. Now, different types are used and this can be a little confusing for users in the beginning. If you have one payment and apply many open documents, it can be challenging to understand what happened and why.
Pay special attention to invoices that have been posted before 01st APR. For these invoices, the VAT has already been considered for the lowered base amount. If you now use the Adjust for Payment Disc. feature for these “old” invoices, then you would again reduce the VAT, which leads to wrong results. Therefore, we recommend that you use different/new VAT product posting groups for new invoices that are posted after 01st APR 2015. You can then switch on the Adjust for Payment Disc. feature for combinations with these new VAT product posting groups only. This way, payments and payment discounts for “old” invoices should be handled in the old way, and the payments and payment discount for invoices posted on or after 01st APR will be handled in the new way.
