How would I allocated VAT/TAX payments and refunds within the chart of accounts?
So once I have done the VAT/TAX recon and I pay the revenue services, how would I allocate this payment and on the flip side allocate a refund?
Appreciate the assistance.
First, read the Guide: https://www.manager.io/guides/8901. Tax payments and receipts of refunds should both be posted to your tax liability account.
Thanks for this. I did have a read through this earlier. So to confirm, I should create a Tax Payment Liability and a Tax Refund Asset? One for monies owed to the tax man and the other for refunds I might receive?
No. You should create only a tax liability account. Both remittances of amounts owed to your tax authority and any refunds they might pay you are posted to the same account, where they offset. The point of VAT schemes is that output VAT and input VAT offset one another.
Likewise, apply the same tax code on both sales to customers and purchases from suppliers. That way, the balance of the tax liability account will tell you what you currently owe the authority or the authority owes you.