Tax accounting date question

[Maf. King]

On Sun 19 May 13 20:16:19 Nestor Stura wrote:
> Hi all, my question is mainly for someone that could understand tax
> accounting, because I do not.
> 
> This is my doubt:
> In all my invoices I include the VAT and yhis goes to a Liabilities account
> waiting for the payment every quarter. Each quarter should be paid on the
> 20th of the following month. e.g. Jan,Feb,Mar should be paid on Apr 20th.
> When I pay, I discount from the bank account and add it to the liabilities
> account, putting it to xero every three months.
> I prepared a report to know how much to pay every Q amd my problem is that
> if I add up inputs and outputs from that account, on 20 Apr appears an
> input that corresponds to the previous Q payment distorting my accounting.
> I thought about changing payment date to 30 Mar, but then I change my bank
> account.
> 
> Do you know how to manage a posting that is done on a date but corresponds
> to a different one?
> 
> Thanks in advance

Hi Nestor,

This is how I handle reporting each quarter for VAT.  I'm in the UK, I'm not 
an accountant, and I have no idea if your VAT processes are similar to mine.

I split the VAT from invoices to a Liability Account and VAT from bills to an 
asset account, and it sounds like you do the same.

Each quarter, I run saved reports for the asset and liability accounts, to get 
the total that I have to pay to HMRC.  The report that runs on the asset 
account excludes transactions that include the liability account, and vice-
versa  (see the "filter accounts" bit of the report options)

When I pay the VAT due, I record a 3-way split transaction that affects the 
asset, liability and bank account.  (ie liability paid off = asset reclaimed + 
bank reduction)  Note that this transaction is dated for the day I make 
payment, and so doesn't always zero the asset or liability accounts if there 
are "new quarter" transactions in the account already.  (It would zero those 
accounts if no new quarter transactions had been entered...)

HTH
Maf.