Dynamics 365 Business Central – How to manage different VAT rates when posting Sales Prepayment Invoices

Dynamics 365 Business Central

Sales Prepayment Invoices in Business Central are used to raise an invoice before shipping goods or supplying services.
Customers are required to pay upfront or provide a deposit before receiving goods and services.
A Sales Prepayment General Ledger code is specified in "General Posting Setup" to post to a Balance Sheet Liability account when a Sales Prepayment Invoice is raised.
An issue arises when goods or services have different VAT rates, as the system uses the "VAT Product Posting Group" on the Sales Prepayment GL Account for VAT calculation.
Creating a second Sales Prepayment General Account with a VAT Product Posting Group of ZERO can workaround the issue.
Two new General Product Posting Groups, PREPAY0 and PREPAY20, can be created to set combinations in the General Posting Setup page.
Selecting the correct General Product Posting Groups for each line on a Sales Order allows for the use of relevant Sales Prepayment Accounts.
This workaround provides a method for posting Sales Prepayment Invoices for items with differing VAT amounts without having to change the "VAT Product Posting Group" on a Sales Prepayment General Ledger account.

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