If you have one or both of the following conditions, the cutting tools will leave the cut leather in the corpse.
1. You have 63 or more items in your backpack (Remember that a BOD Book counts as 1 items for itself and the first 4 BODs in it, +1 item per 5 additional BODs in it, up to 101 items if full of 500 BODs).
2. Your total weight is over 340-350 stones. We've not been able to conclusively narrow it down, but it seems that it is a limit grounded in the old pre-renaissance maximum STR of 100 or the pre-ML backpack size of 400 stones. If the weight of the hides (before cutting) would put you over those numbers, the leather gets cut, but left in the corpse. For most leather harvesting, this limit is hit in the mid 300s.