I got something that worked by defining a flat rate tax code 0% rate and in this case -6% flat rate. The result was that when applied to a purchase (in this case we bought an item from a private individual and therefore had to self asses the Use tax, i.e. use tax is basically US Sales tax that we have to self assess if the supplier does not charge us) the purchase price and invoice amount remained correct (i.e. did not change for the tax) but none the less a tax liability was created for the use tax. This treated it as we wanted, treating the tax amount as non-recoverable and expensing it to the associated item expense but also creating a tax liability so that we remember to pay the tax while not incorrectly changing the supplier invoice amount payable.
Here is the result on the $8,000 purchase:
This seems like a workable solution, but was not intuitive to define. Essentially Lubo’s 0% rate idea but by adding the -6% flat rate automatically recording the liability and expense when the tax code is used rather than having to make a journal entry. In the above example the ‘inflated’ net purchase amount was expensed (Dr Expense 8,480) , the supplier trade payable recorded for the lesser ‘total purchase amount’ (Cr AP 8,000) and the tax liability recorded for the 480 (Cr Tax Liability 480).
This was exactly what I was after and all tax reports seemed to reflect things correctly.
Thanks. Hopefully this is of use to others.