The receipt (sale) of the advance is essentially a normal sale with zero VAT. The sale itself is then simply charged for the remainder of the value of the goods, or alternatively the advance can be charged as a negative return and the item to which the advance is applied at the full price of the goods plus VAT for better record keeping.
How to sell the advance and then apply it?
Create a product for the deposit
Create zero-rated VAT Deposit product. The Deposit product can be fixed-price, or enable the Always ask for price option in the product settings and enter the price only at the time of sale. Once you accept a deposit from a customer, select this product.
Redeeming the deposit by the customer
First, enable Negative Prices in the Application settings. Once you have enabled this option, you will be able to apply the deposit as a negative amount, again excluding VAT, when the customer makes a purchase.
So when selling with a deposit, charge the required goods with VAT along with the Deposit product and enter a negative price for this product at the value of the deposit. The total value of the order is then reduced by the deposit and the customer just pays the remaining value.
