Manage VAT rate changes in Dynamics 365 Business Central

Following the UK’s exit from the EU and the ongoing challenges caused by COVID the capability to easily manage and change VAT rates has become increasingly important.

Changing VAT can be a complicated process in some accounting solutions but Microsoft Dynamics 365 Business Central offers a flexible setup and gives you the power to make changes to VAT with ease. 

As VAT is linked to multiple entities in Business Central including; customers, vendors, items, resources and general ledger accounts, any change impacts your data no matter how small.  Changes in VAT rates are usually scheduled to happen on a specific date and for a set time period, for example, the UK VAT for e-commerce changes that came into force on the 1st January 2021. 


Changing VAT Rates Preparation 

Before a VAT rate change date approaches it’s best practice to post and close all open orders. This puts your organisation in the best position to start new orders and/or documents following the change. Once this is completed you can move onto the creation of the new VAT setup and make the VAT switch on entities. 


VAT Posting Setup Rate

If you only have a few transactions or only deal in the industry affected by the VAT change you may wish to change the rate on the VAT Posting Setup. Choosing this option avoids changing the Posting Groups on items and G/L codes. 

Please note that this option is only suitable if you are able to close all open orders and documents before the switching date. 


The VAT Rate Change Tool

For more complicated scenarios Dynamics 365 Business Central uses the Microsoft VAT Rate Change Tool which can help with conversions of VAT rates on your master data, journals and orders. This comes in handy if you have orders you can not close before the switch date or orders that need to be processed over a longer period of time. 


More Information and Advice 

Monpellier is an accredited Microsoft partner. If you are interested in Microsoft Dynamics 365 Business Central or require additional support or training please don’t hesitate to get in touch with our team of experts. 


For more details relating to Business Central try our informative summary blog

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