How to change the default tax liability account?

Hi there, @priyankac.

It's nice to have you here on the Community page. I can share with you the steps on how to post your transactions to the correct account/s.

Usually, transactions with VAT rates/codes are posting depending on how the codes are created. The accounts under Sales and Purchases must be correct and the selection under Show tax or net amount on return line. 

To correct this, you can inactive the vat codes, then add a new rate with the precise setup.

To make the VAT rate inactive:

1. Open your QuickBooks Online account, then select Edit rates under Edit VAT.
2. Look for the rate/code under VAT Rates, then click on Edit under Action.
3. Tap on Make inactive, then hit Yes to confirm the action.

Then, here's how to add a new rate:

1. Click on Add tax rate from the VAT Rates window.
2. Add the Tax name, Description, then mark the box under Sales and Purchases.
3. Add the Sales and Purchases rates, then set the account.
4. Choose an option under Show tax amount on return line and Show net amount on return line section.
5. Hit Save.

After that, you can modify the codes associated to your bills and supplier credits.

For additional tips about managing VAT in QuickBooks Online, I recommend opening these links:

• Enter and manage expenses in QuickBooks Online
• VAT Feature Update FAQ
• Manage VAT payments in QuickBooks Online

Moreover, you can check out the topics from our help articles for more resources while working with QuickBooks:

• VAT for QuickBooks Online
• Help Articles for QuickBooks Online

If there's anything else you need help with VAT codes and your VAT accounts, please let me know by adding a comment below. I'm just a few clicks away to help. Keep safe!