Once you have converted into a vat registered trader in the United Kingdom or perhaps some other country that follows vat then you should maintain complete vat books for trouble free accounting. These books of accounts have to record and display each vat transaction in greater detail, and can be of great help if you are put through 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 twelve months of your business, even though you can still do so before reaching that vat threshold limit. Once you have become a vat registered trader in the United Kingdom then you will 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 still have to be sure that you store all specifics of vat paid and collected including invoice numbers, dates, vat rates, vat amounts, names and addresses of your dealings with various parties even if these were conducted in other countries, etc.
These records will also need to 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 this data should also be mentioned in your sales books whilst 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 may decide to conduct a vat audit of your business. When this happens, vat officers might call at your business premises and may want to go over all 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 simply 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 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 to understand what exactly is vat then you certainly should go in for the services of a capable vat agent that can help 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 related to vat for a period of 6 years. Various vat schemes require different kinds of books and your vat agent could assist 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 can help you to conduct your small business in a clear and seamless manner. If you too now utilize vat in the United Kingdom then you’ll definitely have to maintain complete vat books for hassle free accounting and auditing.