After you have turned into a vat registered trader in the UK or even in any 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’re put through a vat audit.
In the United Kingdom 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. Once you have become a vat registered trader in the United Kingdom 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 way of maintaining books of accounts especially for vat, you will still have to be sure 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 assorted parties even though they were conducted in other countries, 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 each product or service, and also the vatcheck 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. In addition, maintaining bank and cash books is mandatory 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 and even your vat refunds and might choose to conduct a vat audit of your business. When this happens, vat officers might visit your business premises and would 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 request certain confirmations on specific vat transactions simply to confirm if they were indeed genuine ones. If all your books of accounts pertaining to vat are in order then that will create a favourable impression with those vat officers and also prevent any penalties from striking down your business plus your reputation.
In case you have any problems in understanding what is vat then you should go looking for the expertise of a good vat agent that can assist you to create and maintain all books of accounts related to 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 types of books and your vat agent would be able to guide you on the right format for your business depending on your scheme and vat classifications of the goods and services.
Maintaining proper books of accounts will help you to conduct your business in a clear and seamless manner. In case you too now utilize vat in the UK then you will definitely need to maintain complete vat books for trouble free accounting and auditing.