Why VAT needs to be considered when bookkeeping.

If your business is VAT registered you need to change the way you prepare your books.

Written by BW Bookkeeping and Project Solutions - Tue 27th Apr 2021

bookkeeping and business development services

If your business is VAT registered, it is important to take a step back and look at the way your books are prepared.

If you are using the flat rate scheme, not everything needs to change but you do need to know the quirks and how to make your software deal with flat rate returns.

If you are using a more standard method, you need to learn which expenses do not have VAT on them (often these include insurance, postage and travel).

VAT may affect the way you account for assets, expenses and sales - it is a significant change.

If you are importing from the EU, the rules have changed dramatically this year as the post Brexit rules come in.  The point at which you need to consider where the transactions will appear on your VAT return starts with import documentation.  You can not simply carry on with your books as usual and then consider the VAT return as a standalone piece of work.

Keeping your books straight means that each transactions needs to be looked at to decide the correct VAT treatment as well as where the item should appear in the accounts.

For more information about changes to the VAT rules post Brexit read this information.

The HMRC site has lots of information, have a read of this.

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