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Comment by Seán O'Rourke on November 4, 2011 at 10:05

I'm having the same problem as Denis re
accounting correctly for Irish VAT within Xero. I had planned to move some of
our clients to Xero from other packages such as SAGE, Big Red Book etc but once
I tried explaining to clients (and their bookkeepers) that getting the correct
VAT liability requires at least 6-7 steps and some journals (serious room for
error) they lost interest in Xero as they are used to a single click producing
the correct VAT return. I really hope Xero can address this issue (if only for
the “Global” version). I love Xero but producing accurate VAT returns without
any hassle is vital for most small businesses and there are other cloud based
solutions that offer this (sortmybooks being one). Please Xero, tweak the VAT
calculations a little and I am sure you can start to gain a serious market
share in Ireland.

Comment by Denis Breen on May 20, 2010 at 11:06

Just to give you an update on the vat issues re Xero. We have used Catherine's method to solve the problem ( thanks Catherine ). We're creating two tax reports, one accruals, one cash based, we then take the tax on sales from the cash report and purchases tax from the accrual report. The only other problem we have is accruing the correct amount on the balance sheet as the tax liability is always on the accrual basis. ( I'm starting to glaze over myself at the moment so I won't push any of you into a complete catatonic state ). Anyway Xero is working out well for our clients in Ireland. I've put about 10 of them into it and I'm planning more.
Its a great product.
Denis

Comment by Denis Breen on February 2, 2010 at 15:35

Hi Adrian
in addition to the pc based accounting package, the web accounting packages, Twinfield and Accounts IQ have also got this feature.

Comment by Catherine (Xero) on February 2, 2010 at 9:44

Hi Denis,

Agree it's totally messy but just trying to explore options out loud. Plus we do have a lot to learn around specifics in each country and this gives us a good idea of how things in Ireland work and what you expect so that the bright sparks indeed can investigate!

Thanks for this feedback, very helpful for us, but not so for you :(

Regards,
Catherine

Comment by Denis Breen on February 2, 2010 at 9:26

Hi Catherine

Not sure how that would work.
Your suggesting you pick a vat method, lets say accrual basis. run your reports, take the purchases vat from this report. Go back into settings, change the scheme to cash basis, run the report again, take the sale vat from this report.

Might work but then you would need to post a journal to the sales vat account for the difference in these two reports so your accounts match your returns. In addition this journal would presumably have to reverse each following month.

Messy, very very messy. Sage had a terrible reconciliation process for this very reason for years until they split the coding.

Surely a very bright spark at Xero could separate the coding for vat and all would be well. I know Ireland is a small market but its very well suited to the size of business's Xero is targeting.

Comment by Catherine (Xero) on February 2, 2010 at 4:19

Hi Denis & Adrian,
If Denis is using the Global version of Xero would it be suitable to create tax rates specifically for cash scheme reporting and for accrual scheme reporting then generate the Sales Tax Summary report twice - once for each scheme, picking up the totals from the relevant tax rates for each scheme? A bit mucky I know but would this be an option to get totals that can be used to report tax?

Regards,
Catherine

Comment by Denis Breen on February 1, 2010 at 17:18

Adrian, thanks for the reply, thats really disappointing as I have greatly enjoyed the flexibility of the software and I was hoping to roll it out to various clients.

Nearly all the accounting packages in Ireland require you to set the tax basis for sale and purchases separately. (sage - tas - brb )

Without the ability to do this Xero will not work properly for clients with sales of less than 1M who send invoices. Cash business's like stores, pubs, restaurants etc shouldn't have a problem as there is no invoicing, but professional service firms etc are out. The 1M is applicable as once you are over this you have to move to the accruals basis anyway.

Are you sure this isn't something that could be added to adjust the program for this.

Comment by Adrian Pearson on February 1, 2010 at 16:36

Hi Denis, and thanks for joining us here. Unfortunately, I cannot welcome you with a gift - Xero cannot handle the "hybrid" VAT system you outline. It's either cash basis for everything or invoice basis for everything. Given that the Irish system you describe is quite unique, I don't see a fix for this anytime soon.

As an aside, what accounting systems cater for this in the Irish market?