When you link a company to Xero, Retention Track reads each invoice's line items and uses the Xero tax type on every line to decide how to handle that line. For most lines this is straightforward — standard VAT lines have tax, zero-rated lines don't. Reverse charge lines are different: they have no tax on the invoice itself, but the underlying sale is still treated as taxable for retention purposes.

Tax type mappings tell Retention Track which of your Xero tax types should be treated as reverse charge. Once configured, Retention Track will recognise reverse charge invoices and credit notes automatically, calculate retention correctly against them, and pre-fill the correct tax type when you create new credit notes from them.

In this article we walk you through:

A tax type mapping is a link between a tax type in your Xero chart of tax rates and one of two reverse charge categories in Retention Track:

You can map more than one Xero tax type to each category — for example, both the 20% and the 5% DRC rates can be mapped to Reverse Charge (Income) at the same time. You can also leave a category empty if it doesn't apply.

Configure tax type mappings if all of the following apply:

If you only deal in standard-rated or zero-rated VAT, you don't need to configure these mappings — Retention Track will treat every line according to the tax shown on the invoice.

Retention Track checks the tax type on every line of every Xero invoice, credit note, and manual journal it imports. If the tax type matches one of your configured Reverse Charge (Income) mappings, that line is flagged as a reverse charge line.

This affects four things:

A reverse charge invoice has no VAT on the face of the document, but the underlying sale is still subject to VAT for the purposes of retention. Retention Track calculates the effective tax on each line — zero for reverse charge lines, the standard rate for everything else — and uses this to derive the correct retention amount, both including and excluding VAT.

Without the mappings, Retention Track would treat a DRC invoice line as if VAT had been charged at the standard rate, which would overstate the retention figures.

When at least one line on a Xero invoice or credit note matches a Reverse Charge (Income) mapping, Retention Track marks the document as reverse charge throughout the app — on the contract's Payments tab, the invoice detail page, and the credit note detail page.

When you create a credit note from a reverse charge Xero invoice (see Creating a Xero Credit Note), the Tax Type for Credit Note Line field is pre-filled with the same tax type as the originating invoice, drawn from your mappings. You can change it before submitting if needed, but the default ensures that retention released through a credit note carries the same VAT treatment as the original sale.

Throughout Retention Track, amounts on standard invoices are shown including VAT, while amounts on reverse charge invoices are shown excluding VAT. A small pill next to monetary fields indicates which convention applies. Correct tax type mappings are what allow Retention Track to make this distinction.

From the workspace home, open Companies in the side menu and select the company you want to configure. Scroll down to the Xero Integration card on the company page.

Inside the Xero Integration card, click View Tax Type Mappings to expand the section. You'll see a summary of any mappings already configured (or a "No tax type mappings configured" message if it's the first time). Click the Configure button to open the configuration page.

The configuration page has two sections, one for each reverse charge category:

Each section shows a list of the active tax rates from your Xero organisation, with the tax type code shown as a blue badge, the display name, and the effective rate (e.g. 20% or 5%).

For each category, tick the box next to every tax rate that should be treated as reverse charge for that purpose. You can:

Click Save Mappings at the bottom of the page. Retention Track will store your selections against the company and return you to the company page. The new mappings take effect immediately for any invoices, credit notes, and manual journals imported from that point on, and any documents already in Retention Track that match the new mappings will start being treated as reverse charge.

A UK subcontractor under CIS raises a Xero invoice to a main contractor for £10,000 of construction work, with retention of 5%. The invoice is marked as Domestic Reverse Charge in Xero — the line uses tax type DRCHARGE20 and no VAT is added to the document total.

In Retention Track:

If your workspace doesn't deal in reverse charge invoices at all, skipping this step is safe — there's nothing to configure.

If you do receive (or raise) reverse charge invoices and the mappings are missing, retention figures across the contract — including outstanding balances, the amounts shown on the Payments tab, and the totals on the workspace dashboard — will be incorrect for any contract that contains a reverse charge invoice. Configuring the mappings is the single fix; once saved, the figures recalculate automatically.

If you're unsure which tax types apply in your Xero organisation, your accountant or bookkeeper will be able to confirm which rates you've set up for CIS Domestic Reverse Charge.