Once you have turned 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 hassle free accounting. These books of accounts need to record and display each vat transaction in greater detail, and may be of great help if you are subjected to a vat audit.
In the United Kingdom you will have to go 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 so before reaching that vat threshold limit. Once 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. While there is no set means of maintaining books of accounts specifically for vat, you 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 assorted parties even though these were conducted abroad, etc.
These details should also be summarized when you file regular vat returns on the yearly, quarterly or monthly basis, as decided by hmrc vat department. Your vat invoice too will specifically need to display your vat number, vat rate for each product or service, and the vat check 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 have 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 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. When this happens, 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 might cross check vat invoices with your sales books or request 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 in order then that will make a favourable impression with those vat officers and also prevent any penalties from striking down your business plus your reputation.
If you have any problems in understanding what is vat then you should go looking for the services of a capable vat agent that can help you to create and keep all books of accounts related to 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 goods and services.
Maintaining proper books of accounts can 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 have to maintain complete vat books for hassle free accounting and auditing.