A retail chain runs on an ERP and a point of sale, and most of its tax questions turn out to be questions about how that system is set up — what the till records, what the stock ledger says, and whether the two still agree at the end of the month.
What we are usually called about
None of these is unusual, and none of them is a failing. They are what happens when a growing business runs on a system that was configured for the business it used to be.
Whether the business falls inside the definition that requires integration, what the work involves once it does, and who owns it when the ERP vendor, the point-of-sale supplier and the tax adviser each assume one of the others is handling it.
Shrinkage, transfers between outlets, and returns that never find their way back into the system. It shows up first as margin nobody can explain, and later as a purchase and input tax position that is difficult to support.
Supplier invoices that do not match the purchase record, credit notes raised outside the system, and outlets buying locally against no order at all. Each one is either recoverable tax nobody claimed or a disallowance waiting for somebody to look.
Who can change a price at the till, what a manual discount does to the recorded value of a supply, and whether the system keeps any record of who authorised it.
A retail range can run to thousands of lines, and the classification recorded against each one decides how it is treated. The work is establishing what the item actually is, what the classification rests on, and whether the file supports it — not asserting a heading from a description on a purchase order. No classification is settled without the product, the documents and the current law in front of us.
The ERP, the stock ledger, the point of sale and the tax records each hold their own version of the same transaction. Reconciling them is what turns a set of plausible reports into a position that can be supported, and it is usually the first thing asked for when somebody does come to look.
Outlet count, product range or a new line of business outgrowing the software the chain started on — and then a selection exercise in which every vendor has an incentive and nobody has a brief.
What we do about it
The same three pillars as everywhere else on this site, narrowed to the work this sector actually needs. One practice handles all of it, so nobody is coordinating between a systems consultant, a tax adviser and a bookkeeper.
Systems & Assurance
Selection, implementation and migration
Systems & Assurance
Risk-based programmes and board-level reporting
Tax
Federal — FBR
Tax
Provincial — all four provinces
Compliance & Outsourcing
Bookkeeping, payroll, returns and month-end close
The practice does not resell ERP or accounting software licences and takes no vendor commission, referral fee or paid placement. Implementation and migration work is paid for by the client, for the work done — so a recommendation against a system costs us nothing to make.
The other sector
Manufacture and distribution sold through a trade that settles half its margin outside the invoice — in bonus stock, credit terms, discounts and credit notes.
