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 Post subject: Proforma Invoices/NAV Prepayments
PostPosted: Fri Jun 01, 2012 10:19 am 
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Joined: Fri Jul 01, 2011 12:51 pm
Posts: 5
Location: Nottingham
Country: United Kingdom (uk)
In the UK, a Proforma Invoice is merely a request for payment and does not represent a legal tax invoice. Therefore no VAT is recognised in relation to it.

As such, is it possible to configure Prepayments in such a way that the VAT does not become realized until the full invoice is posted?

So far I have managed to get it so that the VAT is realized at the point of payment of the proforma invoice however this is still not compliant with UK VAT legislation.

Any ideas?


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 Post subject: Re: Proforma Invoices/NAV Prepayments
PostPosted: Mon Jun 25, 2012 12:55 pm 
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Joined: Sat Aug 08, 2009 6:28 am
Posts: 162
Location: gujarat
Country: India (in)
You mean that Proforma only contains amount w/o taxes, then payment will received on basis of proforma will contain only Base amount ?????

Please clear

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Uday Mer | MS Dynamics NAV Techno-Functional Consultant


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 Post subject: Re: Proforma Invoices/NAV Prepayments
PostPosted: Fri Jul 13, 2012 12:01 pm 
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Joined: Fri Jul 01, 2011 12:51 pm
Posts: 5
Location: Nottingham
Country: United Kingdom (uk)
The proforma request payment for the entire amount of the invoice (including taxes) i.e. Base + VAT.

The difference is in the treatment of the VAT. The VAT for the transaction should not appear in a VAT return until the final invoice for the goods/services has been issued.

Does that help?


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 Post subject: Re: Proforma Invoices/NAV Prepayments
PostPosted: Fri Jul 13, 2012 2:11 pm 
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MVP Microsoft Dynamics NAV

Joined: Tue Aug 14, 2001 7:01 am
Posts: 5349
Location: Prague
Country: Czech Republic (cz)
Hi Ian,

its many years since I did a Navision implementation in the UK, but as I remember it.

As you say a UK Proforma invoice is very different to other UK countries, and definitely standard Nav pre-payment does not handle the UK legal requirements. From memory the law states that VAT is Payable at either the date of shipment or date of invoice which ever comes first. So if you are just getting money from the customer you don't have to charge VAT till the goods are shipped. BUT as I recall there is also a stipulation that if you charge the customer VAT, then you must pay that VAT in that same VAT period. So in our case if you are charging the VAT you need to pass it on.

Pre-Payemnts were not in Navision when I last implemented in The UK, so what we would do was create an order with VAT for the full amount. Then add two GL lines the first for the Nett amount. Then bill only that one GL line, thus creating an invoice for the full amount less tax. Then create a reversing line and when you ship the goods you create an invoice only for VAT.

ANyway I have never seen UK -Pre-Payments, but I always had assumed they had localized it to UK VAT law.

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 Post subject: Re: Proforma Invoices/NAV Prepayments
PostPosted: Fri Jul 13, 2012 3:45 pm 
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Joined: Fri Jul 01, 2011 12:51 pm
Posts: 5
Location: Nottingham
Country: United Kingdom (uk)
Hi David,

Thanks for your response. That's correct. In essence the prepayment invoice would not contain VAT but would be requesting payment for the VAT inclusive amount of the order. I believe that the stipulation would be that if the prepayment invoice showed the VAT seperately then it would be liable in that period but we're not raising a VAT invoice, just a request for payment.

I have seen modifications in the past which just creates a new document layout on top of a sales quote but if the prepayments functionality was compliant it would work really well as it would prevent a sales order from being processed outside of the payment terms for that customer and enables full traceability of the transactions. I'm not a believer in modification for modifications sake :)

Really I think it's going to have to be modified somewhere down the line in order to be compliant, it's just a shame that it isn't already.

Thanks for your help anyway


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