Once you have converted into a vat registered trader in the United Kingdom or even in some other country that follows vat you then should maintain complete vat books for trouble free accounting. These books of accounts have to record and display each vat transaction in greater detail, and can be of great help if you’re put through a vat audit.
In the UK you will have to opt for vat registration upon completing 70,000 sterling pounds of taxable sales in the last one year of your business, although you could do so 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 especially for vat, you will still need to ensure that you store all details of vat paid and collected including invoice numbers, dates, vat rates, vat amounts, names and addresses of your dealings with assorted parties even though they were conducted abroad, etc.
These records should also be summarized whenever you file regular vat returns on a 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 each service or product, and the vatcheck total vat amount collected against that sales invoice. All this data should also be mentioned in your sales books whilst all purchase invoices will need to be summarized in your purchase books. Moreover, maintaining bank and cash books is mandatory for vat registered traders.
Maintaining such vat books on an up-to-date basis is very 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. In such a case, vat officers might visit your business premises and would want to look at all your books of accounts to confirm certain doubts lingering in their minds. They might 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 would make a favourable impression with those vat officers as well as prevent any penalties from striking down your business as well as your reputation.
In case you have any problems in understanding what exactly is vat then you definitely should go in for the services of a capable vat agent that can help you to create and maintain all books of accounts related to vat in a clear and methodical manner. You need to maintain books of accounts related to vat for a period of 6 years. Various vat schemes require different kinds of books and your vat agent could guide you on the right format for your business depending on your scheme and vat classifications of your goods and services.
Maintaining proper books of accounts will help you to conduct your business in a clear and seamless manner. If you too now utilize vat in the United Kingdom then you’ll definitely have to maintain complete vat books for trouble free accounting and auditing.