Creating Buyer Created Tax Invoices in Xero
A “Buyer Created Tax Invoice” (sometimes referred to in other countries as a “Recipient Created Tax Invoice” or “RCTI”) is an invoice for sales tax purposes that is created by the purchaser of the goods rather than the seller of the goods. This is common in many industries especially where the purchaser has to assess the quality, quantity or price of the goods after they are delivered.
Xero does not currently have the ability to use templates for Bills (which would effectively address this need), but there is a very simple workaround using the Purchase Order process. Here are the steps:
- Edit a Purchase Order template (you can download one from a docx Branding Theme or just steal mine).
- Create a docx Branding Theme and upload the PO template to it (or add to an existing theme that you use) – note that this PO template should ONLY be used for RCTI purchases – not real Purchase Orders.
- Enter the purchase as a Purchase Order and assign the RCTI Branding Theme to it
- Approve the PO. You can now Send or Print the RCTI. The default file name has “Purchase Order” in it, which you can only change if you download the file and send manually.
- Copy the PO to a Bill and mark it as fully billed. You can reprint at any time from the Purchase Orders / Billed tab, but not from the Bills section.
- Complete the Bill details. I recommend that you attach a copy of the PDF you generated to the bill for easy reference.
You can watch a 5 minute video of the entire process.
Please note that for NZ taxpayers there are some additional requirements published by the IRD – including the requirement that you need to be approved by the IRD before you can issue BCTI and have the words “Buyer-created tax invoice – IRD approved” displayed (which is not in my template).