How tax is worked out on a claim
A ClaimDS claim takes its tax from the original invoice proportionally, or from rates you enter manually — set per agreement, fixed once claims start.
When a claim recovers part of an amount, the tax on it has to be worked out too. ClaimDS does this one of two ways, and which way is a setting on the agreement — so it's worth knowing the difference before you raise claims under it.
How tax should be computed on an adjustment depends on your circumstances and current rules. This page describes ClaimDS behaviour; confirm the right approach with your tax advisor. This is general guidance, not tax advice.
From the original invoice
By default, a claim takes its tax from the original invoice the business volume came from. ClaimDS works out the share of the value the claim represents and applies the same proportion to the invoice's tax components. This keeps the claim's tax consistent with what was originally charged, and it's the right choice when the source invoices are available and consistent.
Manual
The alternative is manual: you enter the tax for the claim line yourself. This is for the cases where taking it from the original doesn't work — for example a fixed, per-unit levy that can't be scaled proportionally, or an adjustment with no single source invoice. It gives you full control, with the responsibility that comes with it.
It's set on the agreement — and it locks
Which mode applies is set on the agreement, so all claims under it behave the same way. Once a claim under the agreement has been raised, the mode is fixed and can't be switched retroactively — so that claims already in flight keep a consistent basis. Decide the mode when you set the agreement up.
Related
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