CLARIFY: BILL sales tax defaults to Zero

Dev guide on sales tax says

Expenses, Bills and Bill items

Normally there is no need to specify the sales_tax_rate or the manual_sales_tax_amount for an expense, bill or bill item yourself. If you leave both of these fields out, the correct sales_tax_rate will be set for the category of the expense or bill.

However, we’re finding, with the “new” BILL endpoint, if neither 'sales_tax_rate" nor ‘manual_sales_tax_amount’ are specified, then ZERO sales tax is applied, not the rate/value appropriate for the item’s category. This behaviour is similiar to how Invoices work now.

Is this intentional (suggesting the Sales Tax info page needs an update too)? Or we might be doing it wrong… :-/

Hello,

This can happen if the bill date is outside of a tax registration window or the tax isn’t reclaimable, as in both cases the sales tax has no accounting effect of its own.

I’m going to assume you’re using a “Universal” company rather than a UK company with VAT registration, but please correct me if that’s not the case. Under Settings, Sales Tax, you can configure sales tax registration periods:

In this example, if I created a bill dated before 01 Sep 2021, no sales tax would be added automatically to the bill item because it’s outside of a sales tax registration period.

There’s also a setting within the sales tax registration to say whether it’s reclaimable tax:

image

If this isn’t checked, then there’s no need to calculate or record the sales tax amount on the bill either as it has no effect. Hope that helps.

Cheers,
Dominic

Thanks Dominic.

That’s interesting, and educational, but doesn’t fit out case. We found this anomaly (compared to how BILLs used to work in the deprecated API) with a UK VAT-registered company, with BILLs inside a sales tax registration period.

//Greg

Hi Greg,

OK, that’s unexpected and I haven’t seen that in my testing on a UK company. Usually we would always record sales tax for their bills as the VAT may be reclaimable.

Could you double check that the category ID is specified correctly within bill_items, and that it’s definitely a VAT-applicable category?

Do you have an example create/update bill request please? Or better, the X-Request-ID header from the API response.

Kind regards,
Dominic