Oracle R12 How to change a paid invoice when you need to make a tax corrections
Changing the tax rate or recovery rate on a paid invoice
First you need to make sure you know the policy of adjusting a paid invoice as many companies do not want to allow this option and by default it should certainly be set to NO. However, we have found that when a user applied the wrong tax code to a transaction and a correction is needed, it is far easier, cleaner and more accurate to change that invoice even if it has been paid.
Changing the original transaction instead of applying a credit note and reentering the invoice has many more benefits. Firstly, the time taken is much less than having to create a credit memo and a new invoice, both of which then have to be paid. If you do create a credit memo and new invoice then you have to be 100% accurate on the invoice distributions that you are entering so the risk here is high as the tax recovery amount could be dependent on the GL code used. Credit Memo and new invoice also means that the tax reporting becomes less clear as instead of one transaction on there you now have 3 which you may or may not be able to link together.
You also cannot change a zero rated tax rate to a standard rate as this would put the invoice out of balance and as it has been paid, the invoice amount has been locked down, a change to a paid invoice is when you have a Zero rate tax when it should be Exempt or Reversed Charged (Offset) or the rate used had the wrong recovery percentage.
How to make the change
To make this change, go to the Payables Module that you have access to that has setup capabilities. Then open the ‘Payables Options’ form.
Navigate to the ‘Invoice’ Tab and find the ‘Allow Adjustments to Paid Invoices’ option and tick it.
You can now make changes to your paid transactions.
When you make the changes, you will need to reapply to create the accounting as often with a change to a tax rate.
After the changes are paid, reset the ‘Allow Adjustment to Paid Invoices’ back to being unticked.