How tax is worked out

Axon Suite works out tax on the server, the same way on every quotation, order, invoice, bill, credit note, till sale and rep app sale. You choose the tax group; the server finds the codes and rates and does the arithmetic, so a preview and the saved document always agree.

A line’s tax is found in this order:

1. The line’s Tax group is the one picked on the line, or else the item’s.
2. Of that group’s codes, only those whose authority covers your subsidiary’s country, and that apply to this side of the trade, are charged.
3. Each code charges the rate in force on the document’s date.
4. Each code’s tax is worked out on the line’s amount after its discounts and its share of the document discount, and rounded to the currency’s decimals. A compound code is worked out on the amount plus the line’s other taxes.

Check the tax on a document

1. Open the document.
2. Read Tax % on each line: the rate the line was taxed at, every code counted.
3. Under the lines, read the Summary: the Taxable amount, then one row per kind and rate, such as VAT 15%, then the Total.

Tax is rounded line by line and then added up, so the summary is the sum of the lines’ tax. A line under two codes, or two lines at the same rate, show as one row per kind and rate.

Change the tax on one line

Pick another group on a line when this sale is taxed differently from the item’s usual group, such as one export of an item you normally sell at the standard rate.

1. Open the draft document and click Edit.
2. In the line’s Tax group column, which shows the item’s group faintly, pick the group to use.
3. Save the document.

The line is taxed under the group you picked; the item keeps its own group for every other line. On a line with no item, pick the Tax group yourself: a line with none cannot be priced.

Sell at prices that include tax

Shops and consumer sales are usually priced with tax included, while trade prices are usually quoted without it. The price list decides which.

1. Go to Sales ‣ Pricing ‣ Price lists and open the price list.
2. Switch on Prices include VAT, so the prices you entered are read as already containing tax.
3. Click Save.

A document priced from that list treats each Unit price as tax-inclusive. The tax is what the price contains, worked out on the whole line, so the line total is exactly the price times the quantity. A document priced from a list with the switch off adds tax on top of the price.

Example

A pharmacy chain prices its shelf items with 15% VAT included. Seven boxes at 5.00 make a line of 35.00: the invoice shows 30.43 taxable and 4.57 VAT, and the customer pays 35.00, not 34.99.

Sell tax-free or exempt

A zero-rated, exempt or out-of-scope supply is taxed under a group whose code has that Category, rather than under no group. The code’s Exemption reason code says why, and goes on the e-invoice.

• For an item that is always tax-free, such as a zero-rated medicine, give the item that group. See Give an item its tax group.
• For one sale that is tax-free, such as an export, pick the group on the line. See Change the tax on one line.

Note

Tax follows the item or the line, never the customer or vendor. A customer who buys tax-free is handled by picking the tax-free group on their lines.

Account for reverse charge on a purchase

When you buy services from abroad, you may have to account for the VAT yourself instead of paying it to the vendor. Tax the bill line under a group whose code’s Kind is Reverse charge, such as the Reverse charge group set up for your country.

The bill’s total to the vendor does not include the tax. When the bill posts, the same amount books to the code’s Tax receivable and Tax payable accounts, so you declare it and reclaim it at once.

Messages you may meet

Message	What to do
This line names no tax group, so it cannot be assessed.	Pick a Tax group on the line, or give the item one.
This tax group has no code registered for the country of supply.	None of the group’s codes applies in your subsidiary’s country, or on this side of the trade. Pick another group, or add a code to it whose authority covers the country.
No tax rate is in effect for this document’s date.	One of the group’s codes has no rate for the document’s date. Check its Effective from, or the document’s date.
The tax group is archived; restore it before editing it.	The line’s group is archived or inactive. Pick an active group, or restore it.
A reverse-charge tax code applies to purchases only; a sale cannot use it.	Pick another group on the sales line.
The line was priced under a different tax group than this document assesses it under.	In the rep app, refresh and send the order again, so the line is priced under the current group.