Chapter 21 VAT records and returns

Question 1

21.2 Records

Answer 1

each taxable person has an obligation to keep and to preserve:
• His business accounting records
• VAT invoices that have been issued and received
• Documentation relating to all imports and exports and documentation relating to all EC acquisitions of goods and dispatches of goods
• Credit notes, debit notes and similar documents which evidence changes in the consideration for supplies made or received
• A VAT account
Business records must be kept for a minimum of 6 years unless an agreement with HMRC is reached.

Question 2

21.3 The VAT account

Answer 2

VAT accounts are divided into VAT payable and VAT allowable. In the VAT payable portion each VAT return should show:
• The output tax due on all sales made in that period
• Any earlier output tax errors that have been discovered during the period
• Any increases or decreases in output tax which have arisen
• Any other adjustments to output tax which are required under legislation
In the VAT allowable portion each return should show
• The input tax allowable for the period on all supplies made to the business in the VAT period
• If any earlier input tax errors were discovered, any adjustments being made in the current period
• Any increases or decreases in input tax arising due to changes in consideration for supplies received
• Any other adjustments to input tax which are required under the VAT legislation

Question 3

21.4 VAT invoices

Answer 3

Some common items in the invoice include:
• A sequential identifying invoice number
• The date of the supply
• The date when the VAT invoice is being issued
• Suppliers name and address and VAT registration number
• Customer’s name and address
• A description of the goods or services supplied
• The quantity of goods and the rate of VAT applicable
• The total amount being charged net of VAT
• The rate of any discount offered
• The total amount of tax chargeable
• The unit price

Question 4

21.5 Retailer Invoices

Answer 4

HMRC allow the issue of a retailer invoice in certain circumstances, the two conditions that must be satisfied are:
• The supplier must be a retailed
• The value of the supply including VAT must be less than £250
If both conditions are met, the retailer’s invoice includes:
• The suppliers name, address and VAT registration number
• The date of the supply
• A description of the goods or services supplied
• The total payable including VAT
• The rate of tax appliable