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Create a solution for non-recoverable VAT and CIS reporting

Started by Eve Radford in Feature Requests | Idea

I am a non VAT registered contractor (meaning I can't recover VAT). I can't use the CIS upload to HMRC for my reporting because the VAT charged on an invoice is incorrectly showing in the 'total paid excluding VAT' field. If I use any other VAT code other than a 0% one the VAT ends up being recovered on the balance sheet incorrectly (but CIS is correct). If I use a 0% VAT code then the CIS is wrong (charged CIS on the VAT amount as well). I have a work around to calculate the CIS correctly (poutting the VAt on a separate non-CIS GL code). This works well for the CIS calculation but it is wrong on the CIS report because it is included in the 'total paid excluding VAT' field.

I do not accept that journalling VAT out from the balance sheet VAT account is a solution. I have too many transactions for this to be workable.

Following the recent update I can now use the statements that Xero provides as it shows these VAT entries as non-CIS payments but it still shows them on the CIS return meaning I can't use it without making manual adjustments so I can't upload it. I therefore have to copy and paste all line items to the HMRC portal which allows for error and is inefficient.

Xero support also suggested coding the VAt to a separate bill. Again with the volume I have this is not manageable.

A CIS-irrecoverable VAT code would be useful if it could post to a nominated GL code (ie in the same category as the CIS spend). For example our CIS labour is 711 and therefore 710 (or 711a) would be a good suggestion for the CIS irrecoverable VAT.

I use Xero because the Lettings department use Arthur online. Given your partnership with this lettings software I'm surprised that Xero isn't more useful for property companies (most of which are not able to reclaim VAT even if they are VAT registered).

Thanks