Poor choice of VAT/GST account setup in the docs?

[Maf. King]

On Tue 2 February 16 07:37:27 Frank H. Ellenberger wrote:
> Hello,
> 
> from my german view the account setup in e.g.
> http://code.gnucash.org/docs/C/gnucash-guide/bus-setupacct.html and
> http://code.gnucash.org/docs/C/gnucash-help/busnss-ar-components1.html
> is suboptimal.
> 
> Imagine the first periode of your business where you spend more money
> for your equipement than you earn. Assuming an equal tax rate for buys
> and sales you will end up with an negative number in Liabilities:Tax.
> You can avoid this by moving "paid tax" under assets as it is in all
> german account templates, which I know. OTOH you must run a separate
> report to get the total of your current tax state.
> 
> So my question: Are there any rules in english speaking countries with
> VAT/GST how this must/should/may be handled?
> 


Hi Frank.

AFAIK, there is no _requirement_ in the UK to handle things in any particular 
way, as long as you can accurately report the VAT totals, and reproduce those 
totals if an inspector visits (I guess a consistent system would be important  
for an inspector, even if your system is "a box of receipts under the bed").

IMHO, the general case where VAT is (expected to be) a positive liability is 
the better way to set the books up.  I do look at my VAT accounts maybe once 
or twice a month to see how big the liability is, and having that as a 
subtotal in the COA is, to my mind, a convenience over running the reports 
(which I do each quarter when I have to file the VAT return with HMRC).

0.02
Maf.