When receiving items into Inventory, the resulting AP batch does not contain tax distribution information.

The set-up is as follows: Inventory has tax code 0 set up for items and purchases at the standard tax rate. (I'm not clear on the function of the item vs. purchase tax rates but they are both set up).

The tax tables in Inventory have the correct rate set up for tax code 0 items and purchases, and ?Tax in item cost? is NOT ticked with the correct GL tax account entered.

When a receipt is posted in Inventory, the correct tax amount is reflected on the Totals window of the receipt. In addition, the Tax Tracking report in Inventory correctly shows the tax amount.

In AP a ?Tax included purchase? distribution is set up using tax code 0 and the standard tax rate. The vendor is set up to default to this distribution and to tax code 0.

My problem is that when Inventory creates a direct AP batch during Day End Processing, the distribution must be selected in AP in order to get the correct tax and clearing account distributions before this batch can be posted.

Is possible set up the link between Inventory and AP in such a way that this extra step in AP is not necessary?

Hi PwC,

I'm not sure that you should be trying to do any tax tracking in AP for those purchases originating in IC. As you noted, IC is setup to deal with the tax and between the IC Tax Tracking and GL Transactions reports you should find that it's handling these entries fine. IC generally passes a Debit to VAT Input (Paid on Purchases), Debit to Stock and a Credit to the IC/AP CLEARING accounts for Receipt transactions involving taxes to be reclaimed.

As far as AP is concerned, when it comes to posting batches passed from IC, it only needs to Debit the IC/AP CLEARING Account and Credit the appropriate AP account based on the Vendor's Account set. It doesn't really care about the tax implications since these were handled by IC already. AP however does continue to handle the Tax processing for non-IC related transactions.

Logical, but can be somewhat inconvenient from the perspective of having to refer to two separate Tax Tracking Reports to then calculate a total for submission on the Tax Returns. I have always meant to look back at this (but never got back to it) to see if there is a way to let AP do all the Tax Tracking which is what you seem to be trying to do.

So, while I offer the above as to maybe this is just how Softrak intended for it to work, I would love it to do what you want AND have all the GL entries balance.

BTW - Be careful that what you are currently doing by modifying the IC batches in AP is not actually causing problems in the GL VAT Input and IC/AP Clearing accounts. If you are truly needing to do this then something may be amiss in your IC GL integration setup.

Hope that helps, Pete

PS: I could remote in and take a look if you want. Contact me directly if this would help.