Once you have turned into a vat registered trader in the United Kingdom or perhaps any 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 can be of great help if you are subjected to a vat audit.
In the UK you’ll have to go for vat registration upon completing 70,000 sterling pounds of taxable sales in the previous twelve months of your business, although you vat validation could do so before reaching that vat threshold limit. After you have become a vat registered trader in the UK then you will have 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 especially 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 dealings with various parties even though they were conducted in other countries, etc.
These details 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 product or service, 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 even as all purchase invoices will need to be summarized in your 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 may choose to conduct a vat audit of your business. In such a case, vat officers might visit your business premises and may want to look at all of your books of accounts to confirm certain doubts lingering in their minds. They may 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 your books of accounts related to vat are typically in order then that would make a favourable impression with those vat officers and also prevent any penalties from striking down your business as well as your reputation.
In case you have any problems to understand what is vat then you should go looking for the expertise of a capable 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 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 would be able to guide you about the right format for your business depending on your scheme and vat classifications of the services and goods.
Maintaining proper books of accounts can help you to conduct your business in a clear and seamless manner. If you too have adopted vat in the United Kingdom then you’ll definitely have to maintain complete vat books for trouble free accounting and auditing.