With HMRC placing more and more importance on scrutinising the records of companies who haven’t paid their VAT on time, now is the time to make sure that all your VAT t’s are crossed and i’s dotted.
When it comes to working out your systems, it’s essential to be aware of your broad obligations as well as the detail of your VAT requirements. In this post, we aim to give you an overview of what you need to be doing to make sure you stay on the right side of the VAT requirements.
If your business is registered for VAT, you are under an obligation to retain specific business and VAT records in such a way that you are able to:
- Demonstrate that your records are complete and up to date.
- Work out the VAT you are due to pay (or reclaim from) HMRC.
- Present the figures you’ve reported to HMRC if you receive a visit.
General records you’ll need to keep
While not an exhaustive list, you’ll be required to retain the following records:
- Annual accounts and profit and loss.
- Bank statements and pay-in slips.
- Cash and accounting books.
- Orders and delivery notes.
- Purchase and sales books.
- Evidence of daily takings, for example till rolls.
- Business correspondence relating to transactions liable to VAT.
- VAT records and a VAT account.
Your VAT records
Your VAT records should include the following:
I. Records of sales and purchases that are VAT related, irrespective of the VAT rate (standard, reduced, zero and exempt).
II. Copies of sales invoices raised by your business and purchases made by your business.
III. All credit and debit notes received by your business.
IV. Details and copies of any self-billing arrangements you have as a supplier or as a customer.
V lisinopril price. Details of any stock given away or used for private use together with information regarding the appropriate rate and amount of VAT.
VI. Copies of any documents related to special VAT treatment.
VII. Export records.
VIII. Records of taxable self-supplies you make.
IX. Details of any adjustments or corrections to your accounts or VAT invoices.
X. A vat account.
Your VAT account
If you’re Vat registered, you’ll need to keep a VAT account as a way of recording the VAT you’ve applied to goods or services you sell and purchases you make. Your VAT record is the bridge between your business records and your VAT return. The way you choose to keep your VAT record is not cast in stone, but the information required in your VAT account needs to demonstrate clearly the VAT:
i. owed on your sales.
ii. owed or able to be reclaimed on any acquisitions from other EU countries.
iii. due to be paid to, or able to be reclaimed from a supplier as part of a reverse charge procedure.
iv. owed as a result of a correction or error.
It’s clear to see from these lists, that dealing with VAT is a process that needs a systematic and detailed approach. Add to this, the focus being placed on scrutinising VAT procedures by HMRC and the importance of having your VAT ducks in a row becomes even more clear. Irrespective of whether you choose to do this inhouse or outsource the job, the message is precise, get it right or get penalised.
If you’d like help to keep your VAT in order, why not get in touch? We can introduce you to one of our services, such as online bookkeeping, which will help automate the VAT process for you.