Sales Tax/Vat refund from Government

[Liz]

On Fri, 3 Feb 2017 13:40:23 +0000
John Whitmore <arigead at gmail.com> wrote:

> He saw that I had an Income account for Vat refunds and said that
> that was wrong as I'd get taxed on an Income and it's not. He said
> that the refund from Government should go into the Liabilities:VAT
> account, which I think is totally wrong as well. 

Lots of things that accountants do seem strange!

A VAT refund isn't income at all.
You paid that money out, and the tax collector (whatever acronym) has
to pay it back.
So its an asset.

However, the accountant wants it in Liabilities, as a "contra account".
The accountant has to fix up any of your mistakes, so I suggest
following her advice carefully - its cheaper in the long run.

Liz