Once you have converted into a vat registered trader in the UK 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 detail, and may be of great help if you’re put through a vat audit.
In the UK you’ll have to opt for vat registration upon completing 70,000 sterling pounds of taxable sales in the previous one year of your business, even though you could do this before reaching that vat threshold limit. Once you have turned into 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 means of maintaining books of accounts specifically for vat, you will still vat verification need to ensure 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 these were conducted abroad, 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 need to display your vat number, vat rate for every service or product, and also the total vat amount collected against that sales invoice. All this data will also need to be mentioned in your sales books even as all purchase invoices will need to be summarized in the purchase books. Moreover, 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 or even your vat refunds and may decide 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 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 typically in order then that would create a favourable impression with those vat officers as well as 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 should go looking for the expertise of a good vat agent that can help you to create and keep all books of accounts associated with vat in a clear and methodical manner. You will need to keep your books of accounts connected with vat for a period of 6 years. Various vat schemes require different kinds 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’ll definitely have to maintain complete vat books for hassle free accounting and auditing.