Payment Discount VAT Calculation on Posting an Invoice

mjhiggins

When posting a purchase invoice from a supplier say for £100, the supplier also offers 5% payment discount, the actual supplier invoice states (assume 17.5% vat)

Goods £100
VAT £16.62
Total £116.62

VAT legistlation in the UK states you must always assume the lower vat amount i.e. £16.62 (even if you do not take the payment discount)

NAV only adjusts VAT when and if the payment discount is taken and posted.

thoughts?

kriki

[Topic moved from 'NAV Three Tier' forum to 'NAV/Navision Classic Client' forum]

rhpnt

Then use the invoice discount amount.

rsfairbanks

It works for us (UK version).

Set your supplier with a Payments Term code that includes a discount percentage.

mjhiggins

Hi

I have set the discount terms on the supplier (Cronus UK), insert an invoice and press F9, the stats say VAT will be 17.50. Only after applying a payment and taking a discount, will NAV post the VAT Adjustment?

rsfairbanks

What is the payment terms code and what is the discount on that?

FDickschat

You need to tick the field "Payment Discount Excluding VAT" in General Ledger Setup".

mjhiggins

Issue is that the vat must always be £16.62 regardless of if you take discount or not (according to UK VAT Legislation)

NAV always posts VAT at the full rate and adjusts for the payment discount - IF you take the payment discount. If you do not take the payment discount, the VAT remains at £17.50

I cannot get it with any type of setup to calculate and post the VAT with the invoice at £16.62 unless you adjust it manually.

FDickschat

mjhiggins wrote:

Issue is that the vat must always be £16.62 regardless of if you take discount or not (according to UK VAT Legislation)

NAV always posts VAT at the full rate and adjusts for the payment discount - IF you take the payment discount. If you do not take the payment discount, the VAT remains at £17.50

I cannot get it with any type of setup to calculate and post the VAT with the invoice at £16.62 unless you adjust it manually.

Yes, I know how VAT is calculated in UK. We integrated several European Countries into 1 DB and I learned a lot about different setups in DE, BE, NL, FR, UK and ES.

In my "Cronus UK Ltd." (NAV 4.03) the field "Payment Discount Excluding VAT" in GL Setup is wrong and needs to be changed #-o (see Screenshot how it should be). When "Payment Discount Excluding VAT" is ticked NAV calculates VAT correctly (at least in the way UK interprets it). \:D/

rsfairbanks

I can you repeat my Version GB Dynamics NAV 6.0 SP1 works as per UK legislation and previous versions did as well. We have the same g/l set up as in the picture and a supplier with the following payment terms:
Due Date: 60D; Discount Calc: 10D; Discount %10 and the VAT on the order is 15.75%

Lenw

What we have found is that in addition to having the 'General Ledger Setup' Option 'Pmt. Disc. Excl. VAT' selected, you also need to enter a value in the 'VAT Tolerance %' field too. The value in this field needs to be at least as high as the Max. Settlement Discount % you will be offering. If you set it to 100% then you should find that NAV will automatically discount the Vat on the invoice as it is being created.
The help on this field is as below, which confirms the above to be the correct setup:

'VAT Tolerance % Field'

The General Ledger Setup Table

In this field, you can specify the maximum allowed VAT percentage to be used for discounting the VAT element in sales and purchase order processing. If you do not specify any value, the program will not discount the VAT element when calculating VAT.