Reverse VAT with A2X


#1

A question to anyone using A2X to import their invoices into their accounting software, in our case Xero. We’ve spotted an issue that’s come up and A2X support have advised they’ve never seen it before but I don’t see how that it possible unless we’ve done something very wrong. So the issue relates to Reverse VAT. When A2X send you an invoice with each payment from Amazon it has a long list of money received and money spent. On this list is your main income… the tax from that income and also seller fee’s and fba’s fee’s… In order for A2X to work correctly (for everything to match up) the invoice is based on inclusive VAT, however, Amazon fee’s and FBA fee’s are issued by Amazon outside the UK therefore you must reverse VAT. If you do the mappings in A2X for Reverse VAT it’s treating the net as the gross… so your taking away VAT from the amount when in fact under the Reverse VAT rules it clearly states you must add 20% vat (so the sum should be exclusive of VAT)… I’ve managed to get around this by creating another invoice that takes the two lines off the main invoice and has these two lines in another invoice set to exclusive of VAT… But I was wondering how this issue has never come up before… As far as I’m aware it’s simply not possible to have amounts that are based on being exclusive for vat and others that are inclusive of vat on the same invoice… any help welcome :slight_smile:


#2

Probably not much help since we don’t use Xero, but QuickBooks with Entriwise doesn’t have such issues AFAIK.

It’s amazing though that such a basic case is not handled right in Xero.

In our case, Entriwise posts Amazon commission and FBA fees with reverse charge QuickBooks VAT code and this requires no manual adjustments of any kind.


#3

Xero has the same VAT code as do A2X but the problem is A2X issue’s an invoice which contains both VAT Inclusive Amounts and VAT Exclusive amounts on the same invoice… so If you just code the Reverse Charge correctly it only picks up the net amount but treats it as the gross so it doesn’t pick up enough… I got around it by removing the affected lines and creating another invoice but I thought I must be doing something wrong as the issue must have been flagged before but A2X have been very quiet about it.


#4

In QuickBooks with Entriwise this is posted in separate documents, so there is no issue.

If A2X took import correctness seriously, obviously they would do the same. Maybe they are just really clueless. Not sure what’s worse.

It looks like many A2X users don’t have any accounting background. Thus such problems can go unnoticed for a long time. When someone, like yourself, finally notices the problems, they are ignored or told that nobody reported such issues before.

The fact is that this is a major issue and basic functionality at the same time. Basic functionality that should have been working correctly from the very beginning.


#5

That’s basically what I said to them it has to be posted separate… You can manually add the Reverse VAT into the VAT return by popping the figures in the correct boxes but then what’s the point of spending lots of ££ on a system that’s meant to do it for you… Thanks for your reply / advice.


#6

We use link my books and xero, link my books sends an invoice to xero then you match this with the payment from amazon. The invoice shows Tax Exclusive amounts. I checked the sales figures are correct by taking amount on the invoice and adding 20 percent and it works out. Shows the fees as 20 percent reverse charge of amount charged by amazon.


#7

Hi Porterfield, I’m guessing link my books provides you with a separate invoice for your Amazon Fee’s to your sales? This is where the problems stands… others have said other 3rd parties issue an issue just for the fee’s… A2X have put everything on one invoice… therefore you have items that are exclusive of VAT and some that are inclusive of VAT. The answer I came up with was to remove the 2 lines relating to fee’s from the A2X invoice and create a new invoice with VAT set as exclusive… then this calculates correctly by adding the 20% vat then removing it with it set to VAT Reverse… but as far as I’m aware it’s impossible to do this on a single invoice… I sent my data cross to A2X but no reply… still looking for someone using a2x who has actually found the answer without editing it… I just simply don’t understand why they’re putting expenses and income on a single invoice… there’s nothing to stop them feeding in multiple invoices… one for income … one for fee’s and they do another for reserved balances…


#8

Hi, its only one invoice. If i have say, £1200 in sales then the invoice that is sent to Xero will show £1000 and it has a 20 percent tax rate.It shows on the invoice as being a tax exclusive figure. So link my books is working out the figures and then sending them to Xero, all Tax Exclusive. The amazon fees are what amazon has charged me(expenses without any vat), on the invoice and they have the 20 percent reverse charge rate against them. I think this all correct.


#9

Yes that is 100% correct how it should be done, the software is working well. I wish A2X delivered their invoices like that rather then mixing it all into one.


#10

I haven’t used A2X but I’ve seen other users post screenshot on here and I thought it has a (complicated and extensive) tax code mapping file you have to setup for the invoice importation?


#11

AFAIK, yes. It doesn’t have auto-settings.

In contrast, Entriwise sets everything up for you. The only thing you might need to do is map your Amazon SKUs to QuickBooks inventory, if you need stock tracking. If one doesn’t track stock, no configuration is required. It’s all on autopilot.


#12

Hi PeterB yes that’s correct it has a complete tax code mapping which is great, however, it maps everything and then sends it through as ONE single invoice… and you basically need some items on the invoice to be inclusive of VAT and others to be exclusive of VAT. The answer is to have multiple invoices which is what other software providers are doing going by the above comments… I’ve asked A2X about this by they haven’t offered a solution…


#13

It is perfectly acceptable (in practice) to have an invoice that covers multiple VAT rates, the VAT rate should be stipulated for each line item.

It seems in your case that either A2X is not properly maintaining the per entry tax code on the invoice, or that Xero is not properly reading and importing the invoice. Since this would seem to be a fairly basic function i assume it must be a setting somewhere on invoice creation or invoice import.


#14

Thanks for your reply… Got it sorted in the end… was an A2X issue speaking to Amazon it hadn’t correctly imported all the tax lines for each market place :slight_smile:


#15

Dragonmaster, great you got it sorted,

Following up with what Porterfield said, LinkMyBooks is definitely more suited for the UK/EU seller, they take things into account things such as Departure Country, B2B sales all which is needed to get your VAT returns correct, A2X use a much simplified system which may result in paying more money in VAT than you need to.


#16

Is anyone able to send a link for Entiwise. We currently use A2X but aren’t convinced it’s worth the money. We can find Linkmybooks online but not Entiwise.


#17

We booked a video call with A2X and once we spoke to them they resolved all issues and it’s doing it’s job fine now… might be worth speaking to them.


#18

Couldn’t find it? If you type entriwise into search you get it first.