Once you have converted into a vat registered trader in the UK or perhaps some other country that follows vat you then should maintain complete vat books for trouble free accounting. These books of accounts need to record and display each vat transaction in detail, and may be of great help if you’re put through a vat audit.
In the UK you’ll have to opt for vat registration upon completing 70,000 sterling pounds of taxable sales in the last twelve months of your business, even though you could do this before reaching that vat threshold limit. After you have turned into a vat registered trader in the UK then you’ll need to obey all applicable vat rules framed by HM Revenue and Customs department or hmrc vat department. While there is no set means of maintaining books of accounts specifically for vat, you will still vat verification need to ensure you store all specifics of vat paid and collected including invoice numbers, dates, vat rates, vat amounts, names and addresses of your respective dealings with assorted parties even though they were conducted abroad, etc.
These records should also be summarized whenever you file regular vat returns on the yearly, quarterly or monthly basis, as decided by hmrc vat department. Your vat invoice too will specifically have to display your vat number, vat rate for every service or product, and also the total vat amount collected against that sales invoice. All of this data will also need to be mentioned in your sales books whilst all purchase invoices will need to be summarized in the purchase books. Moreover, maintaining bank and cash books is required for vat registered traders.
Maintaining such vat books on an up-to-date basis is extremely important since vat officers at hmrc might compare your vat returns or even your vat refunds and might decide to conduct a vat audit of your business. When this happens, vat officers might visit your business premises and may want to look at all your books of accounts to verify certain doubts lingering in their minds. They may cross check vat invoices with all your sales books or request certain confirmations on specific vat transactions only to confirm if they were indeed genuine ones. If all of your books of accounts pertaining to vat are in order then that will create a favourable impression with those vat officers as well as prevent any penalties from striking down your business plus your reputation.
If you have any problems to understand what is vat then you certainly go in for the expertise of a good vat agent that can assist you to create and maintain all books of accounts associated with vat in a clear and methodical manner. You need to maintain books of accounts connected with vat for a duration of 6 years. Various vat schemes require different kinds of books and your vat agent would be able to assist you about the right format for your business depending on your scheme and vat classifications of your services and goods.
Maintaining proper books of accounts can help you to conduct your small business in a clear and seamless manner. In case you too now utilize vat in the United Kingdom then you will definitely have to maintain complete vat books for trouble free accounting and auditing.