Retention in the Construction sector is a sum of money withheld from a payment to a contractor / subcontractor until the contracted project is completed to a satisfactory standard within an agreed time period.
The current system generally sees half the money retained being released on completion of the project, with the other half not being paid until the "defects liability period" has passed. This is normally 12 months from completion and within that time, all contractors are expected to resolve any issues or defects which have been identified.
a) Settings-
To work with retention- go to Administration > Contracting > enable the option Use retentions for sales.
Use new retention scheme date (Sales) - this is the date from when the retention will take place
Calculation of VAT at Retention invoice (Default) as YES/NO,
If No is selected- The VAT will be charged on the final amount before any retention done, means on the initial amount despite any retentions.
If Yes is selected- the VAT will be charged on Initial amount- retention amount. This means, it will be on the value after considering the retention, and when the retained amount will be returned, VAT will be further charged on that value in future.
b) Configuration per contract- After settings, make sure to enable the option per contract under terms tab
- Enable the option- Apply Retention
- Retention %- add the default percentage for the amount to be retained
- Retention- add the Retention days, for how many days the amount will be retained
- Calculation VAT at retention invoice- enable if VAT will be separately calculated on retained amount.
c) Once the settings are done, the contract can be used in the document to record the transaction
For example- Create a new invoice, make sure to choose the right contract. With selection, the options will be enabled automatically. This example is with Calculate VAT at retention invoice.
Once the data is entered, post the document. Below is the transaction detail,
For retention- DR Retention Receivables
CR Sales of Goods
Retained VAT-
DR Retention Receivables
CR Retention VAT payables
When the agreed time period is over, the retained amount can be returned using the below document- Invoice (Retention claim)
The details will be filled automatically from the Invoice document, transaction type will Retention Return
Once the Invoice- Retention claim is posted, user can generate Tax invoice using the below option 
Below is the transaction details created with this document-
That's how the retentions are created in the base.
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#Retention #Contracting