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accounts-gapreno
November 21, 2023
Question

VAT payment to HMRC showing in profit and loss report is that correct?

  • November 21, 2023
  • 1 reply
  • 0 views

Hi All 

 

I use Quickbooks as a day-to-day accountancy software for my VAT business and then quarterly my accountant reviews my VAT return figures (that I send over in an Excel sheet as they don't use QB) and sometimes the VAT figures on my QB is out slightly out with the figure my accountant sends me.  As my actual VAT doesn't match my accountant's figure I can't just use the "Record Payment" under the VAT Tax part of QB when I pay my HRMC VAT as it won't "match" the figure deducted from my bank account when I do the VAT transfer.  I usually but the VAT payment down as an expense to the business and it shows in my Profit and Loss report but I'm not sure this is correct?  

 

Should  VAT payments to HMRC be showing on my Profit and Loss report?


Thanks

Amanda 

1 reply

JessT
JessT
November 21, 2023

Hi Amanda,

This is more of an accounting question, so I highly recommend consulting your accountant again about your manual process.

 

VAT is a tax added to the price of goods and services that you collect from your customers. When you make a sale, you accumulate taxes that you need to remit to the government. This affects your Balance Sheet and not your Profit and Loss. Therefore, when you remit the taxes to the government agency, you're simply reducing the accumulated liability on your Balance Sheet.

 

With regards to always having a discrepancy with the tax calculations in QBO and your accountant's, it's best to address this issue as soon as possible. That way, you won't have any issues in the future, and thus you can use the Record payment option and the payment is reported in the Balance Sheet instead of Profit and Loss.

 

Please refer to this articles so you will be guided with the setup: 

 

 

Feel free to go back to this thread if you have other questions in mind.

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