I am in the UK and currently in the 'Flat Rate' scheme (14.5%), thus VAT should be pretty straightforward.

The accounting period is every 3 months (quarterly), and I like to track the current VAT owed in the VAT Filing section.

Maybe every two weeks, I check the VAT owed amount and transfer out an amount to a separate bank account so that at the end of the VAT quarter I have the money already to pay the VAT outstanding.

When transferring the money out, I keep track of it each time in Zoho books using the "VAT Payable" account in Expenses.

This works well, and obviously does not show up as an expense.

The problem is, when I finalise the payment and mark it as 'PAID' in Zoho books, the amount is again deducted from the 'Cash' and 'Bank Balance', thus if I'd already transferred £2,500 to the external account under 'VAT Payable' during the 3 months, when I confirm in Zoho that this has been paid in the VAT Filing, it again deducts £2,500 from the accounts?

Can you give me some advice please?