Xero for Barristers - information and config steps
How does MTD involve LEX?
For the purposes of MTD, LEX is not ‘functional compatible software’. It does not contain all the information required to submit VAT returns and does not connect directly to HMRC’s MTD online portal. LEX does, however, contain important payment/VAT information needed to form part of a Barrister’s VAT return.
Why Xero?
Xero is an innovative and industry leading cloud-based accounting product. It offers MTD compatibility as standard within a vast range of features. It has an extremely accessible and active third-party developer program and an excellent API (Application Programming Interface). Xero’s approach to embracing third party investment and their hands-on approach assisting external applications to connect to Xero, has allowed us to develop a robust LEX Integration with Xero solution, which we can expand upon in the future.
Summary: What is LEX Integration with Xero?
Put simply, LEX Integration with Xero will:
“Automatically insert barrister specific payment data, at the point of receipt, directly into that barristers own individual version of Xero”
Once configured, the feature works automatically and requires no additional action from those processing the payments in LEX. The fact that the payment data is automatically inserted into the barrister’s own Xero account, removes the requirement to export/import data from LEX manually into Xero (or any other accounts product), which reduces the work required to make an MTD submission through HMRCs portal.
Cost
LEX Integration with Xero is enabled, licensed, and supported on a per-barrister basis. This cost does NOT include consultation or assistance with LEX configuration, which if required, will be charged separately at our standard hourly rate. To discuss licence costs please speak with your account manager.
IMPORTANT: LEX Integration with Xero - Ongoing Support
The connection between LEX and Xero allows us to programmatically insert information into individual barrister Xero accounts. Our support and development teams have the tools available to investigate connection issues between LEX and Xero’s API, and any error messages resulting from failures to connect affecting the sync of individual payments.
The authentication given by users to the LEX system during the Xero integration configuration process, does NOT give our support team or development team access to individual barrister Xero accounts. This means we have no facility to amend or update settings in Xero, nor can we investigate or examine issues within Xero itself on a user’s behalf.
We track the success of transactions between LEX and Xero and capture relevant IDs where appropriate. If information has left LEX successfully, this will be evidenced in LEX. Should you have a query relating to the information inserted by LEX into Xero, you MUST provide us with any information we request from within Xero (descriptions and/or supporting screen shots), as we have no way of accessing such information.
Investigations into errors with Xero’s own features will need to be raised with, and investigated by, your Xero provider/reseller/gold partner associate.
We also cannot provide guidance or training relating to Xero or any other Xero related third-party products or applications.
Setting up LEX Integration with Xero
LEX Integration with Xero is a per-barrister solution that connects to individual organisations within Xero. Therefore, the configuration steps below must be completed for each barrister account (Xero organisation) that would like to benefit from the automated synchronisation of payments for MTD compliance.
NOTE: Before commencing setup, please ensure you have the appropriate Xero account username(s) and password(s) available, as they are needed to authenticate LEX’s access. If you are setting LEX Integration with Xero up on behalf of another/others, please ensure you have the authentication credentials available to do so, or, be in the presence of those who do (like the barrister whose account is being activated). Non-barrister users in LEX will need to be registered as a ‘Xero Administration User’ in order to access the required Xero Settings / Configuration options available within each Barrister Record. See below for further details.
IMPORTANT: It is imperative that you DO NOT connect LEX to a live instance of Xero without fully understanding the configuration process, the changes it will make to the Xero organisation to which LEX is connecting, and the data that will be inserted when the configuration process has completed. Our support team cannot access individual Xero accounts to remove payment data or alter connection settings. The consequences of unintentional or incorrect completion of the configuration process, and the subsequent automated insertion of data, cannot be reversed by anyone at Opus 2 LEX.
Xero Settings Tab
A new tab called ‘Xero Settings’ is now available within each Barrister record (accessible via LEX – Search – Barristers & Clerks). Opening this tab will provide access to an option to commence the connection process:
Authentication
It is at this stage that you will be asked to input the user credentials of the Xero account you would like to connect to the barrister account in LEX: |  |
All barristers are able to access their own ‘Xero Settings’ tab. For a clerk/admin type user to be able to access this area of the software to configure it on a barrister’s behalf, that user must be added to the ‘Xero Administration User Group’ in system options. Our support team can assist you with adding users to this list.
 | You will be asked to authenticate the connection and allow LEX to connect to Xero.
If you have access to multiple ‘Organisations’ in Xero (separate Xero accounts), please select the one that should be linked to the barrister account in LEX from where you initiated the authentication process.
WARNING: Selecting the wrong account at this stage could lead to payment data being inserted into the wrong Xero account. |
 | After selecting ‘Allow Access’, you will be taken back into LEX to continue the authentication process. |
Whilst the above authentication process is in progress, LEX will indicate that it is waiting for completion. In the event of an interruption, the process can be restarted or cancelled using the options provided:
NOTE: This is the only time that LEX requires the entry of Xero credentials. From this point forward, LEX uses access tokens to authenticate the insertion of payment data, which does not require the repeated entry of user account details (even where the password to that account changes in future). Disconnection from LEX can be achieved via the process described later in this guide.
Basic Xero Configuration Settings
The next part of the process requires you to make some important decisions about the integration between LEX and Xero. The first sections of the ‘Configure Basic Xero Settings’ screen cannot be amended in LEX (as depicted by the padlock icons to the left of each box). These fields display settings received from Xero. Their purpose is to confirm that you are connecting to the correct Xero account:
IMPORTANT: Upon completion of the connection process, the ‘Year End Date’ and ‘VAT Registration Number’ in this section will overwrite those stored in LEX. Do NOT therefore, proceed past this point in the process unless the details in Xero are correct. Whilst LEX is connected to Xero these fields cannot be amended in LEX.
In the remaining section of the ‘Configure Basic Xero Settings’ screen, you are required to make three careful selections:
 | 1 - Receiving Bank Account - You MUST select the Xero Bank Account into which LEX will insert payments. You will not be able to proceed past this point in the configuration process without selecting a receiving account. |
| 2 - The date from which payments are required to be synchronised with Xero - The standard requirement, and therefore default date here, is the 01st April 2019. However, the date can be backdated to the beginning of this calendar year (01st January 2019), if required. | |
| 3 - Syncronisation Payment Confirmation - Confirmation that you would like the synchronisation process to commence immediately after completion of the configuration process. |
IMPORTANT: As per the information in the popup, it is important to note that once a barrister account is successfully connected to Xero, this will have some impact on some of the standard LEX features available to users surrounding payment processing. Due to restrictions within Xero, and to ensure parity between the two applications and data integrity, once a Xero account is connected to LEX, users will only be able to receipt one payment per receipt for that barrister. The system option that ‘receipts will also only show matched fees’ will also be enabled. There is a further consequence relating to the matching of unallocated fees after receipt, which is explained later in this guidance.
Receiving Bank Account – Account Codes
For a Xero Bank Account to be selectable in LEX as the Receiving Bank Account, it must have an Account Code set in Xero. By default, a Bank Account will be created with a blank Code, so you may have to add a Code manually.
If your account does not have an Account Code, click on the Account Name to access the settings window and then allocate one.
After amending the code in Xero, return to the configuration process in LEX. When you’ve made the required selections and read the notice, clicking ‘Confirm’ will move the process onto the next stage; ‘Nominal Codes’.
Nominal Codes
Accounting software uses ‘nominal’ or ‘account’ codes to categorise items purchased/sold. This next screen of the configuration process displays the five nominal codes that LEX will automatically create in Xero at the completion of this stage of the configuration process. LEX uses these codes to categorise the payment information it inserts.
IMPORTANT: These codes must NOT be edited in, or removed, from Xero, as this WILL result in an error in the LEX synchronisation process. To resolve such issues will require either:
- Rectification directly within Xero or,
- The re-running of the LEX configuration process (end-to-end).
Opus 2 LEX will be unable to help with these options.
Rounding Code:
The nominal code screen also includes reference to a ‘Rounding Code’.
LEX002 Expenses Account Type: ‘Sales’ or ‘Expenses’
Before LEX creates the LEX002 Nominal Account, users MUST confirm whether it is to be created as a ‘Sales’ or ‘Expense’ type account. The default position is ‘Sales’. We’ve set this as a default as per the following guidance provided by our Accountant Partners:
For our clients, we recommend that all fees and expenses from LEX are set to income so that once imported, the reimbursed expense receipts in LEX are put in the correct box/category in the Xero VAT return and the Xero trial balance. Out of pocket expenses recharged to a client by the barrister are classed as income and are presented as such in a barrister’s accounts.
We advise that our clients give us the original tax voucher/receipt for the same expenditure, and this will be added as an expense in the barrister’s accounts based on the date that the expenditure is incurred. We chose not to match the reimbursed expenditure with the original expenditure for the purposes due to the timing differences between when an expense is initially incurred (for example in 2019) for it then to be added to a fee note later. The theory being that if the barrister gives us absolutely all of their receipts/purchase invoices, then in totality over the space of the next few years then all of the expenditure incurred will have been recharged, reimbursed and the barrister will have broken even on the basis of these transactions alone.
We appreciate not all accountants operate in the same manner. To accommodate different practices/preferences, users can amend the default type from ‘Sales’ to ‘Expense’ in the LEX Configuration screen, using the drop down provided.
LEX005 Carter Account Type: ‘Sales’ or ‘Expenses’ 
A separate Nominal Code is created specifically for the synchronisation of ‘Carter Payments Out’ (see p22 of this guide below), on the basis that a similar decision between ‘Sales’ and ‘Expenses’ applies.
The relationship between an IA and SA is one of a Contractor (IA) and Sub-Contractor (SA). Therefore, payments from an IA to an SA may be classified as an ‘Expense’. The default position in the configuration process is ‘Expense’. Users can amend the default type from ‘Expense’ to ‘Sales’ in the LEX Configuration screen, using the drop down provided, if required.
LEX003 Other Income Code: Sitting Fees
This nominal code will be used during the sync process for cases where the ‘Case Type’ is ‘Sitting’.
We’ve separated payment for such fees out into a separate account based on the following advice from our Accountant Partner:
Sitting fees are employment income and are reported as such to HMRC by the Ministry of Justice payroll department. We recommended LEX integration keeps sitting fees separate as these do not belong in the trading accounts of a barrister, nor do they belong on a VAT return. Keeping sitting fees in a separate nominal code makes it easier to strip out the total amount of sitting fees received by the barrister when preparing the quarterly VAT returns and year end accounts
For those barristers we personally act for, we report gross sitting fees (rather than the post-tax figures received into Chambers) on the barrister’s annual tax return under the employment income section. We get the information from the P60 prepared by the Ministry of Justice, which is given to the barrister who then forward this onto us.
Please contact our support team if you do not have, and would like, a Case Type of ‘Sitting’
Clicking ‘Next’ will move the process onto the next stage ‘Configuring VAT Rates’.
Configuring VAT Rates
Each instance of LEX is configured with its own set of VAT codes; therefore, the process of mapping the codes in LEX to those available in Xero is a manual selection process that needs to be repeated for each Barrister connection. The ‘Configure VAT Rates’ popup contains three columns:
1 - On the left, the LEX VAT RATE column.
This will display each of the separate VAT codes available in your instance of LEX.
2 - In the middle, the XERO TAX RATE (FEES) column.
In this column you are required to select the Xero VAT rate from the drop-down list provided, which matches the corresponding LEX VAT RATE. This selection will be used for the nominal codes that are NOT set as ‘Expense’ type in the previous configuration section. The VAT codes available for selection here are limited to ‘Sales’ type VAT codes in Xero.
3 - On the right, the XERO TAX RATE (EXPENSES) column.
In this column you are required to select the Xero VAT rate from the drop-down list provided, which matches the corresponding LEX VAT RATE. These will be used for the nominal codes that that ARE set as ‘Expense’ type in the previous configuration section. The VAT codes available for selection here are limited to ‘Purchase’ type VAT codes in Xero.
NOTE: The XERO TAX RATE (EXPENSES) column will only be shown if users select ‘Expenses’ for one or both of the LEX002 and LEX005 nominal codes.
If there is no appropriate XERO TAX RATE to match a LEX VAT RATE available in the selection drop-down list, you must either:
1 - Open Xero and create a new XERO TAX RATE to match.
Using the ‘Refresh Tax Rates’ option at the bottom of the configuration window after returning to LEX from creating the code in Xero, will ensure the new VAT rate appears for selection in the drop-down list.
Or
2 - Leave the selection blank.
IMPORTANT: If you leave the selection blank and a fee/expense in LEX is matched to a payment with that LEX VAT RATE, the sync process will error until an appropriate VAT code is selected in this configuration screen.
Once you’ve made your VAT code selections, press ‘Confirm’ to continue the authentication process.
Confirmation Screen
The final stage of the configuration process gives you the ability to review your selections and confirm that you are happy for the synchronisation between LEX and Xero to commence.
If any settings are incorrect, you can use the navigation options at the bottom of the screen to move forwards and backwards through the configuration screens:
At any stage you can cancel out of the process and return via the ‘Edit Configuration’ option in the ‘Options’ menu in the Xero Settings Tab, which will take you back to the section of the process you had reached:
After completion of the configuration process, if you go to the Xero Settings Tab, a popup will confirm whether or not Xero is connected. You can also access the configuration menu via this popup:
IMPORTANT NOTE: Opening the configuration settings without completing it end-to-end will STOP the sync process. You MUST therefore, complete the entire configuration process and ‘Confirm All Settings Are Correct’ to restart the sync even if you have not amended your previous selections.
Automatic Sync of Backdated Payments:
WARNING: If you opted to backdate the synchronisation start date during the configuration process, LEX will commence the transmission of un-synced payments for that barrister (chronologically, using the date of receipt) immediately after the confirmation process is completed. Insertions into Xero are irreversible from within LEX. Please remember: any unwanted LEX data in Xero will have to be manually moved from within Xero by the Xero user.
Using this option removes the authentication token generated via the configuration process and will cease all communication between Xero and LEX for that barrister account. The Xero Settings tab will revert to the original ‘Connect to Xero’ option.
IMPORTANT: The disconnection process will not remove any of the data previously inserted by LEX into Xero whilst the connection was active (this includes all receive/spend money transactions and nominal codes).
You can check the Xero connection of all barrister accounts in LEX by enabling the ‘Xero Status’ column in the Barrister Search Grid via the Configuration Options panel:
Disconnecting Xero from LEX
Within an organisation’s settings in Xero is an option to disconnected ‘Connected Apps’ like LEX:
If a user disconnects LEX from within Xero, LEX will show this in the Xero Settings Tab and give users an option to reconnect:
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