If the business is owed VAT by HMRC it shows under the heading 'VAT Liability' in the Trial Balance but is correctly shown as a debit which is an asset. If possible the Trial Balance's label 'VAT Liability' could just be e.g. 'VAT' and this would do the job as a debit or credit entry would mean it was either an asset or a liability. Can this be done?
Also (and more importantly) the Balance Sheet shows it as a negative liability but it is actually a Current Asset. Can the VAT owed to the business be shown as a Current Asset in the Balance sheet?
Hi Ian,
To change the account name, go to the Accounts list and double-click on the account.
Unfortunately you cannot change the classification of an account - the VAT Liability account will remain under 'Liabilities' in the balance sheet, even if it has a debit balance.
Regards,