I have a specific problem calculating the payment to a Landlord after an expense has been paid. The idea is that in our software if we receive a £1000 rent for a Landlord and the Landlord is due to pay tax on that then we hold back 20%. If there is an invoice to be paid then it should take off that value from the income before working out the tax. Quite straight forward. But in the following scenario we have a problem. Here it is..
Landlord Receives £1000
Tax Held £200
Landlord Paid £700 (£100 Held On Account)
(Invoice introduced For Payment £150)
Invoice Paid £100 (Part Paid)
At this point the Balance of the account is £100 and there is £50 still outstanding to pay from the invoice.
My problem is that now a part payment of an invoice has been made the Tax retained is reduced from £200 to £180 because we have reduced the liability by paying £100 of the invoice, which means that there is now a further £20 free to pay an extra part of the outstanding invoice. Again if I pay that £20 then the tax liability is reduced a bit more and so on.. for 7 cycles I believe.
If anyone understands this I wonder if you can tell me if there is a formula to work out in one go to get the actual total invoice payment in one go instead of having to loop causing multiple decreasing payments.
Forgive me if I have made no sense.. but I think I have. Look forward to your responses..
Derek.