Best Practices for Handling Prepayments with VAT: Supplier Sending Separate Prepayment & Tax Invoice

Summary:

How to properly manage prepayments with VAT in accounts payables when the supplier sends separate prepayment and tax invoices.

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We are dealing with a scenario where a supplier sends a prepayment invoice with VAT separately and then issues the tax invoice separately at a later date. What is the best practice for handling this in accounts payable to ensure proper VAT treatment and accounting entries?

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