Once you have turned into a vat registered trader in the United Kingdom or perhaps any other country that follows vat then you should maintain complete vat books for hassle 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, although you could do this before reaching that vat threshold limit. Once you have turned into a vat registered trader in the United Kingdom then you will need to obey all applicable vat rules framed by HM Revenue and Customs department or hmrc vat department. Although there is no set way of maintaining books of accounts specifically for vat, you will still have to be sure that you store all details of vat paid and collected including invoice numbers, dates, vat rates, vat amounts, names and addresses of your respective dealings with various parties even though they were conducted abroad, etc.
These records will also need to 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 product or service, and also the vatcheck total vat amount collected against that sales invoice. All of this data should also be mentioned in the sales books even as all purchase invoices will have to be summarized in the purchase books. In addition, 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 choose to conduct a vat audit of your business. In such a case, vat officers might call at your business premises and may want to look at all of your books of accounts to verify certain doubts lingering in their minds. They may cross check vat invoices with your sales books or ask for certain confirmations on specific vat transactions simply to confirm if they were indeed genuine ones. If all your books of accounts related to vat are typically in order then that would create a favourable impression with those vat officers and also prevent any penalties from striking down your business as well as your reputation.
If you have any problems to understand what exactly is vat then you certainly should go in for the services of a capable vat agent that can help you to create and keep all books of accounts associated with vat in a clear and methodical manner. You will need to keep your books of accounts related to vat for a duration of 6 years. Various vat schemes require different kinds of books and your vat agent could assist you on the right format for your business based on your scheme and vat classifications of the services and goods.
Maintaining proper books of accounts will help you to conduct your small business in a clear and seamless manner. In case you too have adopted vat in the UK then you’ll definitely need to maintain complete vat books for trouble free accounting and auditing.