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How to: Set Up Reverse Charges on VAT

Microsoft Dynamics NAV 2013

In Microsoft Dynamics NAV, you can use reverse charge VAT accounting for a specific range of items to prevent Missing Trader Inter-community Fund Fraud (MTIC), also known as carousel fraud. This feature is supplemented by the Reverse Charge Sales List report. The VAT accounting changes will affect companies trading in electronic goods and integrated circuit devices, such as mobile telephones, microprocessors, and central processing units. These goods will apply to reverse charges.

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Legislative information may be subject to change by HM Revenue & Customs (HMRC). For more information, see the HMRC website.

To reverse charges on VAT

  1. In the Search box, enter VAT Business Posting Groups, and then choose the related link.

  2. Create a new VAT business posting group. Set up the needed VAT product posting groups.

  3. Open the General Ledger Setup window.

  4. On the Reverse Charge FastTab, fill in the fields as described in the following table.

    Field Description

    Threshold applies

    Specifies if reverse charge invoices will be processed.

    Threshold Amount

    Specifies the “de minimis rule” amount that is determined by the tax authorities. The reverse charge does not apply to supplies with a VAT-exclusive value below this amount.

  5. Open the Sales & Receivables Setup window.

  6. On the Reverse Charge FastTab, fill in the fields as described in the following table.

    Field Description

    Reverse Charge VAT Posting Gr.

    Specifies the VAT business posting group code for reverse charge VAT.

    Domestic Customers

    Specifies the VAT business posting group code for domestic customers.

    Invoice Wording

    Specifies the wording that is printed on the invoice to indicate that the invoice is a reverse charge transaction.

  7. Open the Purchases & Payables Setup window.

  8. On the Reverse Charge FastTab, fill in the fields as described in the following table.

    Field Description

    Reverse Charge VAT Posting Gr.

    Specifies the VAT business posting group code for reverse charge VAT.

    Domestic Vendors

    Specifies the VAT business posting group code for domestic vendors.

  9. To set up items subject to reverse charge, select the item, and open the Item Card window.

  10. On the Invoicing FastTab, fill in the field as described in the following table.

    Field Description

    Reverse Charge Applies

    Specifies if this item is subject to reverse charge.

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