Once you have converted into a vat registered trader in the United Kingdom or even in 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 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 last one year of your business, even though you can still do this before reaching that vat threshold limit. Once you have become 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 means of maintaining books of accounts especially for vat, you will still vat verification 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 though these were conducted in other countries, etc.
These records should also be summarized when 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 total vat amount collected against that sales invoice. All of this data should also be mentioned in the 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 might choose to conduct a vat audit of your business. When this happens, vat officers might visit your business premises and may want to look at all your books of accounts to verify 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 related to vat are in order then that would create 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 to understand what is vat then you certainly should go looking for the expertise of a good 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 keep your books of accounts related to vat for a period of 6 years. Various vat schemes require different kinds of books and your vat agent would be able to assist you about 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. In case you too have adopted vat in the UK then you will definitely have to maintain complete vat books for hassle free accounting and auditing.