Inconsistency in Tax-reporting

The disadvantage of using a linked Supplier/Customer to determine if a tax code applies to the Sales or Purchase component is:

  • A Manager user must enable the “Customer” and “Supplier” tabs and at least create a dummy customer and supplier before they can specify if a Journal entry or Receipt/Payment is a sale or purchase.

  • When a selecting a Customer/Supplier, the user would need to select a contact from a database combining all customers and all suppliers (a longer list). The combined database would need to show which entries are for customers and which are for suppliers (as an entity can be both a supplier and customer of a business). In practice a Manager user will know if they are looking for a customer or supplier entry so specifying this first may make data entry more efficient.

  • Correction of this thread’s topic “Inconsistency in Tax-reporting” must wait until Improvement to payment and receipt forms is implemented, which is probably a larger task.

  • An alternative would be to add a drop down Sale/Purchase to journal entries (at what ever level was thought to be optimal). For Receipts/Payments, instead of using line item credit/debit status to determine line item Sale/Purchase; a transaction level Sale/Purchase drop down could be added or use the existing Receipt/Payment drop down. A change which would only effect the “Tax Summary” Report and only for negative Receipt/Payment line items. In both cases these changes would only be an incremental improvement in Managers functionality if they corresponded to the vision of where Manager is going, something I’m not privy to.

Is this topic here and this topic - Concept BTW rapport (Dutch VAT report)
relevant to us lesser mortals who don’t have advanced accounting skills :grinning:?

I only do VAT Returns every quarter using the VAT Calculation Worksheets. I don’t use the other VAT reports. I have read both topics and I think the second topic is only relating to the Dutch report based on your having two Vat accounts - Vat Payable and Vat Claimable.

The gist of the two topics I guess is down to how to enter the VAT when refunding a client for a product sold or getting a refund from a supplier. But I don’t really know whether this affects the VAT Calculation Worksheets.

I ask this because more than once I have had issues with Manager where at the end of the financial year or a particular quarter where the amount I need to pay in Vat Calculation does not match the amount owing on the summary tab despite the fact that they should match. I wonder if it is related to this where I have been refunded purchases etc.

Whether or not the topic is more or less relevant to lesser mortals is not the reason why I started the topic.
It is a question of whether or not Manager is dealing in a correct way with VAT.
We don’t have two VAT accounts in the Netherlands. You have VAT which you have to pay because you sell goods or services and there is VAT which you can reclaim because you buy goods or services. This all can be booked on one “mixed” account but the VAT Calculation Worksheet should show in the correct way the VAT amounts as a result from sales and the VAT amount as a result from purchases. That is where the discussion is about.
Manager should in all cases represent the correct figures, so basically it affects all of us. That’s why forummembers with more accounting skills try to get it right and that benefits all of us.

I believe this may also relate to my issues at Negative invoiced amounts missing from GST (tax) reports - #12 by Patch

Manager reports at the invoice summary level (not per line item). And as you mentioned, does not differentiate between get on purchases and get on sales.

My situation is even worse because a card file cannot be both a custoner and supplier in manager.

Perhaps a rethink is due here.

The short answer is, your problems mybe different to to what is discussed here.

The “VAT calculation Worksheet” is a report transformation of the “Tax summary” report. Which means the information in the “Tax summary” report has been used to calculate local reporting fields with the results formated in a similar manner to local forms. So if the “Tax summary” report is indeed correct then so should the reformatted report / “VAT calculation Worksheet”.

To try and clarify what is being discussed here, lets assume you go to one of your suppliers collect some goods or receive a service and they issue you a invoice. You pay your 166.66 and leave. I have intentionally left out the details of the two line items so we can focus on how Manager processes them and later decide the result we actually need for particular cases.
Official tax invoice

Option 1
We take the invoice to the bookkeeper our business uses who recognizes it as an invoice from one of the businesses suppliers so creates a matching purchase invoice in Manager

As we paid while we were at the supplier the bookkeeper also entered the payment into Manager

In Manager it the invoice now shows it has been paid

As we are a new business and that is the only transaction it is visible in the summary screen in Manager

But more importantly for this thread it is visible in the “Tax summary” report. The entire transaction has only effected the Purchase for Vat reporting

Option 2
Now suppose our book keeper had decided to enter the same invoice as a “cash” purchase in Manager. So didn’t create an invoice in Manager but entered the same information directly as a payment.

Looking at the Summary screen in Manager, it is identical to option 1 above

However when looking at the Tax Summary report it has changed. The Tax liability has not changed but now we are reporting more Purchases as well as some Sales.

There is at least an “Inconsistency in Tax-reporting”, the subject of this thread.
What Manager has done is assume

  • Line item 1 and line item 2 are independent stand alone transactions
  • Line item 1 is a purchase as money is going from an external party to the business
  • Line item 2 is a sale as money is going from an external party to the business.

This type of transaction is a barter type transaction, which jurisdictions define and require treatment as a sale and separate purchase when that is what is occurring (eg Australia ). The correct way to enter them in Manager using invoices is to create a Purchase invoice for item 1 and a sales invoice for item 2. When the payment is entered into Manager 266.66 is allocated to the purchase invoice and -100 to the sales invoice (or they can be settled with a journal entry as described in the guides).

What sales and what purchases should be reported to your tax authority depends on exactly what item 1 and item 2 are and local tax laws. Importantly though this is a decision the business owner makes to comply with local laws. The suggestion in this thread is it would be helpful if a Manager user could specify if a transaction was a sale or purchase and that specification would then apply to all the line items in a transaction. The facility is particularly useful where most data data is entered into Manager via importing bank transactions rather than first entering invoices (“cash” sales / purchases in Manager terminology).

An equivalent issues occurs with sales if a point of sales system external to Manger is used. The POS generates the sales invoices. When the transactions are imported into Manager via a bank statement import, most will be assigned a sales however if any negative sales adjustments are used, Manager will record it as a purchase.

@Hennie Yes I agree that there is an issue that affects all of us using Manager. What I actually meant was whether there an issue with regards to VAT returns - i.e. am I filing my VAT returns accurately. The discussion was not clear on this point as it seemed to be more about a specific report and a specific set of circumstances e.g. when you sell something and then refund the client type scenario rather than just a general buy something from a supplier then sell to client type of Vat reporting.

So I was not really sure if I needed to worry about my Vat returns in that respect given the fact that I twice (to my knowledge) had issues where the Vat calculation report amount owing did not match what was on the summary page.

But looking at what Patch has shown in the latest comment it is easy to see that there is definitely a problem with certain reports showing discrepancies. My key concern when I posted was about whether I am paying/receiving the correct amount of tax as calculated by the VAT calculation worksheet.

@Patch Very well explained. I have a far better idea of what you are talking about here now and as you say probably not related to my issue although it may be as the “refunds” were done via journal entries. Anyway my accountant is looking into that.

Very interesting how the result changes whether you are doing a purchase invoice versus cash payment direct.

Manager allocates sales/purchases in journal entries identically to how it allocates them in Receipts/payments. So exactly the same issue occurs. With your problem the important thing is if the “Tax Summary” report is really correct or if the error is just easier to see in the “VAT calculation Worksheet”

  • If the Tax summary is indeed correct then maybe there is a problem with the report transformation.
  • If the tax summary is not actually correct then you maybe experiencing the issue describe in this thread.

This inconsistency has been fixed in later versions of Manager
It now shows the same result as if a purchase order.

That is still in the ideas category, but clearly Lubos is aware of the issue.