Once you have converted 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 greater detail, and can be of great help if you’re subjected to 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 previous one year of your business, although you could do so before reaching that vat threshold limit. Once 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. Although there is no set way of maintaining books of accounts specifically for vat, you will still 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 various parties even if 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 each service or product, and the vat check total vat amount collected against that sales invoice. All of this data should also be mentioned in your sales books whilst all purchase invoices will have to be summarized in the 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 and 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 would want to look at all of your books of accounts to verify certain doubts lingering in their minds. They might cross check vat invoices with all your sales books or ask for 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 typically 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 should go looking for the expertise of a good vat agent that can help you to create and maintain all books of accounts associated with vat in a clear and methodical manner. You will need to keep your books of accounts connected with vat for a duration 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 based on your scheme and vat classifications of your services and goods.
Maintaining proper books of accounts will help you to conduct your small business in a clear and seamless manner. If you too have adopted vat in the UK then you will definitely need to maintain complete vat books for trouble free accounting and auditing.