Our accounts are managed by an accountant. When we pay coproration tax it has already been worked out. Other software allows me to simply tag my banking as corporation tax paid. Can this feature be introduced to QF. Currently tagging this payment makes it an asset on my balance sheet. Which given it has been paid from my bank, it can’t be an asset
An example from another site.
Hello @Gavin_Smith
Is your account set up as a limited company or a sole trader?
Tagging on ltd company
It doesn’t “become an asset”, rather the payment serves to net off the liability on the corporation tax balance sheet nominal that arises when you enter the journal to record the corporation tax charge for the previous accounting period. If you haven’t yet created such a journal then it’ll look like an asset until you do.
Basically, however much corp tax your accountant has told you you owe, make a journal on the last day of the relevant accounting period to debit the P&L code for corporation tax and credit the balance sheet liability nominal (I don’t have a ltd co account so I can’t look up the exact codes). This will show the tax charge in the year to which it relates, with a liability on the year end balance sheet, and when you tag the payment as shown by Steve above then the liability will disappear.
Thanks Ian,
I see that the need for the manual ledger is to ensure that the CT is taken off the correct years accounts.
Still a simpler system might allow me to tag it on banking as a payment of VAT, then ask me which year/date this CT tax relates to, it would then automatically create the ledger. Thus simplifying the steps…
The amount you pay doesn’t always line up with the amount of tax you actually owe for a given year, the payment amount can be adjusted by interest, overpayments from a previous year, etc. etc. And unless you’re right down to the wire preparing your accounts very close to the tax payment deadline, then you’d already have created your journal to recognise the liability well before you actually come to pay it.
Unfortunately I don’t use my bookkeeping this way and I work on a cash basis mostly. The accountants do the bits I don’t and we have a large cash reserve to deal with this. I still think that this reasoning is flawed and that the point of quickfile is to allow non accountants to do the majority of work without complexity. That seems to be the targe for similar software on the market. If this is the case then allowing as little as possible to be handled via ledgers would be a major positive step.
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