Xero - beautiful accounting software

Xero Business Community

Xero Business Community

Hi everyone, Come on over to the new discussions in Xero Central. It’s a more intuitive way to connect and chat all things business with one another. Ask questions, dish out answers, and get involved.

You can still view topics in the Xero Business Community to see all the useful knowledge that’s been shared there; and you can restart conversations you feel have been of huge value to you on Xero Central.

If you have brilliant ideas for innovations, you can keep on adding feature requests in the Xero Business Community, and voting on existing requests. There’s more in store, as we come up with the best way to take on your thoughts and share developments
Community > Feature Requests >
0
Vote

CIS - Applying a credit will wrongly change deduction report

Started by Steve R in Feature Requests | Idea

Short version: Don't apply credits to payments that have CIS deductions, it will cause you pain.

Long version:
A day early I decided to finalise our monthly CIS report. I'm still running a paper system alongside Xero for CIS and the amount Xero said we have collected as CIS deductions was different to my paper records.
Researching further, one of the sub contractor payments had a credit note applied (essentially, we double paid the previous month and a dummy credit was created to correct the figures in this month). For some reason I cannot fathom **;
* Xero reported on a bill entry page (normal bill in current month) a deduction of £107 being taken. (correct)
* Viewing a custom report (cash accounting) for ac 981 showed £107 as being set aside waiting for payment to HMRC (correct)
* The Amount to be paid to HMRC was £80 (incorrect)

Xero decides that if you apply a credit to a supplier invoice, it allocates that across each line and then (silently, without even altering the view of the entered bill) reduces the CIS being deducted, but only from the report to HMRC it appears. My view (perhaps I'm wrong) is that it should make no difference to the tax deducted based upon how a bill is paid. It certainly wouldn't affect a VAT deduction/refund in the way it affected the CIS deduction/refund

If you find yourself in this situation, the corrective actions were to:
* Undo payments to that supplier
* Split their bills into separate bills for Materials and labour
* Apply the credit only to the material bills, and only ever pay labour as if it came from the bank.
and of course, CIS is cash accounting, so if you're into your next monthly period you'll have to make your correction calculations in the current month as you can't fix/alter/correct anything by date even if you haven't reported to HMRC.

I hope this saves someone the time it's taken me to work all this out

**numbers simplified, it was all a little more complicated than this.