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

[Wm...]

Tue, 2 Feb 2016 09:25:07 
<1739398.kgLUci1kCN at calufrax.nottingham.standbyevents.co.uk>
Maf. King <maf at chilwell.net> wrote...

>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).


Frank, as M says Input and Output as Liabilities is what any 
uncomplicated UK business will use as once you get trading you will 
general owe the tax lady (nominally we pay tax to the Queen) most of the 
time.

Generally there is nothing stopping anyone from putting the Purchase and 
Sales VAT under Liabilities *and* Assets but one of the general ideas of 
VAT is that you take one from the other and end up with a single number 
owed to or from the Gov, the Input and Output is just for reporting.

The UK VAT Accounts template
..\share\gnucash\accounts\en_GB\uk-vat.gnucash-xea
has a VAT setup that you might be able to borrow from more sensibly, 
e.g. it has VAT as a top level account which may make more sense to non 
Anglo-Saxon views of where the top of a CoA should be.

I can't remember if it is included in all language installs so you might 
have to hunt it down if you want to use it to play with.

-- 
Wm...