I would be grateful for any advice on this question. We hold a deferment duty account with HMRC which we pay on the 15th every month. HMRC send us a notice telling us what they are going to take by DD around the 7th each month. By this point we have closed the ledgers and prepared the management accounts. Therefore we account for deferment duty due in the following month when it actually relates to the previous month. Is this incorrect as obviously the 'matching concept' states that you must match costs to sales in the same period. But at the time we prepare the accounts we are unaware of the exact value of the deferment duty due. Thanks. Kate
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What does your accountant say?
Your accountant should have explained that all you need to do is estimate the liability to the best of your knowledge - much as you must already do for other supplies for which you are invoiced in arrears, such as electricity charges.