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Xero Tax (UK) | Prevent the auto-reversal of negative balances so we can offset debtors and creditors where necessary

This is not a simple feature request. This is a blatant fault with how Xero Tax handles asset figures.

In this particular case we have two accounts in the book-keeping records for CIS tax, because we wish to track CIS deducted by contracted on sales and CIS deducted from subcontractors separately. Transfers are made between the accounts as appropriate when liabilities are reported for payment to HMRC.

At the year end, we want to show this as a single balance. As the net result was an asset at the year end, we tagged both to an appropriate asset type. Instead of showing the resulting net asset, Xero Tax treated the credit balance as if it was a debit balance, resulting in higher assets. It then adjusted the profit and loss reserve shown in the accounts to make the balance sheet balance. This means that the final accounts have a net asset figure incorrect by double the amount of the credit balance.

I have tried to explain why this is an issue to a Xero Support person this morning, but it is clear they do not understand the accounting issues involved.They also do not appear to understand that some accounts can be an asset or a liability, such as director's loan account and VAT.

At present Xero Tax is producing incorrect accounts without any warnings or flags. It is not unreasonable to expect accounts produced directly from the book-keeping records are correct. Please update this as a priority.

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Stephen Brown shared this idea  ·   ·  Report…  ·  Admin →
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under review  ·  AdminHannah G (Admin, Xero) responded  · 

Appreciate your input here, everyone. Our team is aware of the challenges our partners are facing around the auto-reversal of negative balance. It’s on their roadmap to investigate and provide a better user experience.

For the time being, I’ll move this idea into ‘Under review’ status. And when there's movement, we'll make sure to come back here and let you all know.

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  • Mark Nesbitt commented  ·   ·  Report

    This does need urgent attention. Xero seem to think the software is working as designed.

    When an accountant has mapped an account (with a negative or positive balance) as a Current Liability at every step along the way, for Xero Tax then to move it to Current Debtors with no warning, is not working as designed. I'm sorry, that is a big flaw in the software.

    There should at least be a warning. But also an option to over ride this. If I wanted to show these accounts as Current Debtors I would tag them as such.

    On top of this, at no point have I been offered a solution by Xero.

    The only solution I can see is to journal all the accounts being affected into one account - which makes using Xero for management accounts redundant. Or certainly it adds friction to the year end process.

  • Stacey Guy commented  ·   ·  Report

    We have also has this issue on multiple clients resulting in incorrect balance sheet totals being reported.

  • Ian Thomson commented  ·   ·  Report

    I have the same issue with HP balances. I did a one line journal between Short Term and Long term balances and ended up with one transaction going to Debtors rather than offsetting the Long term balances.

  • Simon Jones commented  ·   ·  Report

    Hi Catherine

    Yes –if you name the account: “Less Provision for…… it stays with the asset as a reduction, the L and the P have to be capitalised – it does work, though how anyone is supposed to know this from the training material I don’t know!

  • Sarah Bell commented  ·   ·  Report

    Currently in Xero Tax when preparing statutory accounts, all negative debtors get automatically moved to a creditor code. A bad debt/doubtful debt provision will always be a negative debtor so this needs to be able to be grouped in to the 'trade receivables' tag on set up and remain there. (currently it stays under the correct tag, but gets moved on the accounts reports to 'other creditors').

  • James Lovell commented  ·   ·  Report

    Very annoying, this error makes the accounts incorrect!

  • Harry Lumb commented  ·   ·  Report

    There have been loans/credit cards set up as bank accounts in Xero to keep track of them - when these are brought through to Xero Tax they are automatically mapped to current assets. When remapped to to creditors, it incorrectly reduces the creditors balance instead of increasing it. Please could this be corrected.