Thought I had this sorted, but now looking at the accounts, I think I might be wrong. Can anyone tell me how I account for the total SMP recovered when entering salary and HMRC Liability. Should I create a separate account ' SMP Recovered' to enter the payment separate to HMRC Tax & NIC Liability? Thanks
Hi Lindavies,
I don't think there is a hard-and-fast rule on this - you could create a new liability account for SMP, or you could simply include the payments in the 'Income Tax and NI Liability' account. If you create a separate account: when you receive the SMP payments from HMRC create a Money Received transaction from the SMP account to the Cheque Account. When you pay the SMP to your employee create a Money Paid Out transaction from the Cheque Account to the SMP account. If you are registered for VAT then both transaction should have the VAT Treatment set to 'Out of Scope'.
Regards,