It’s a basic check that needs to be done every year – reconciling the sales reported on your VAT returns to those in your annual accounts. HMRC will do this, so if there are differences, the tax inspector is likely to ask questions.
There are several reasons why the sales reported in your accounts may be higher than the total from your quarterly or monthly VAT returns. Some of your turnover may be exempt from VAT, or outside the scope of VAT if you sell to businesses in other countries.
We can help you explain any differences to HMRC should they ask.However, it is essential that you retain copies of your VAT returns.
Although HMRC insists that all VAT returns are submitted online, you can only access copies of VAT returns which were submitted in the last 15 months, no more. Don’t forget to print out VAT returns once they have been submitted!
Speak to Vincent & Co if you have any questions about VAT and how to keep clear and concise records.