1. Home
  2. /
  3. UK Accounting
  4. /
  5. VAT Account: What a...

VAT Account: What a Realistic VAT Account Should Contain

Nov 10, 2022 | European VAT, UK Accounting

Things you need to know about a VAT Account: What It Should Contain

Your business is valuable, and therefore, it must continue at a smooth pace without hindrances. VAT rules and regulations are important accounting matters that must be considered.

These matters affect the business operations in relation to the state functions. If you require help with formulating a VAT account, then you are at the right place.

This blog article discusses the important details associated with the VAT account. You may learn what a VAT account is and the importance it holds. Further, the information related to the structure, including the necessary details, will be presented. 

Moreover, the case of bad debts will be explained, and the information related to reclaiming VAT in such a situation will be discussed.

Finally, the important timelines associated with VAT matters will be discussed. These details may assist the reader in significant taxation matters. 

VAT Account UK – Importance and Structure

VAT Account is an important document associated with VAT charged to consumers and from suppliers. It is a significant record that allows businesses to complete the procedure of VAT return. 

VAT Account the UK – Importance

The VAT Account carries useful information that holds a significant fiscal value. It carries the information related to the VAT paid and received. Moreover, it is presented before the HM Revenues and Custom department to be reviewed for the respective VAT records. 

VAT Account the UK – Structure

According to the regulatory framework structured by the government of the UK, there are some specific details that are required to be present in a VAT account. However, the government has not formulated any laws that declare a specific mandatory structure for the account. Nevertheless, the important information that must be provided is as follows:

  • The input and output VAT amounts. 
  • The amount of VAT payable to HMRC.
  • The amount of VAT reclaimable from HMRC. 
  • If the business employs the VAT Flat Rate Scheme, then the respective percentage must be added. 
  • The Northern Ireland-based businesses must also include the EU VAT records. 

UK VAT Account – Bad Debts

According to the UK government recommendations, such VAT invoices where the consumer fails to complete the payment procedure are labelled as bad debts.

 These invoices can be added to the VAT account in order to receive a relation for the loss experienced by the business. This is done in the VAT return. Moreover, the Bad Debt account is required to be kept separate from the other documents. 

Bad Debts – Conditions

The UK VAT regulations have made it mandatory for the Bad Debt to be more than six months old in order for it to be considered valid.

 Also, the maximum limit of the time span is four years and six months, during which the claims made to the HMRC are declared to be considered. Moreover, the record of the claim must be kept for four years and ten years in case of VAT MOSS. 

Bad Debts – Structure

The government has also pointed out the important details that must be included in the Bad debt document in order for it to be considered. These important details are as follows:

  • The total VAT amount must be included.
  • Received payments
  • VAT claimed on a debt
  • VAT period
  • Details of invoice. 

UK VAT Account – Timelines

The timeline is important when filing tax records. At the time of VAT return, the accuracy of timelines associated with the transaction may allow the responsible stakeholder to accurately decide the VAT amount for the specific period.

It is to be noted that the VAT account is presented to the HMRC at the end of the accounting period.

Therefore, it is important to know the period of any transaction under subjection.

This means that only after knowing the time period of the transaction can it be decided which period the transaction is associated with and to which return it must be included.

Timelines – Tax Point

The time of the transaction, particularly that of the supply, is known as the tax point. It can vary according to the situation of the transaction.

There are some specific possibilities where the tax point can be considered to be according to the situation. In the case where no invoice is issued, the date of the item supply serves as the tax point.

When an invoice is issued, the date of the invoice must be considered. If the dates of the issue of VAT invoice and the supply hold 15 days or greater gap in between, then the date of supply is to be considered.

In case when invoice is issued in advance, the date of payment or the invoice is considered according to the one that took place earlier.

Timelines – Tax Point Exceptions

In the case of the VAT Cash Accounting Scheme, the date of receiving payments acts as the tax point. Moreover, there are also different tax rules for barristers and construction-related trades. If business items are acquired for personal use, there exist other exceptions. Further, there may be two tax points, i.e., an advance deposit and a final payment. 

Frequently Asked Questions

How do you work out a tax point in exceptional situations? 

There are two types of tax points, the basic and the actual tax points. The basic tax point is considered as the time of availability or supply of goods and performance of services. The basic one is overruled in the case of the actual one.

This occurs if the invoice is issued or the payment is received either before the basic tax point or the invoice is issued 14 days after the basic tax point. In this case, the tax point is the time when either the entry is made in the former scenario or the invoice is issued in the latter case.

How can I claim a discount?

Suppose the discount is taken up within the specified time. In that case, you need to adjust the consideration. The VAT amount is accounted for by issuing a credit note. In case you choose not to use a credit note, the original invoice must contain the following information:

1. the discount terms (which must include the time by which the discounted price must be paid),
2. a statement that the customer can recover as input tax the VAT paid to the supplier

How to account for goods that are put to private or non-business use?

Suppose you give away or put to private or other non-business use goods you have acquired or produced during your business. In that case, VAT is due on cost, and you need to record only the following:
1. the date that the goods were given away or set aside for non-business use,
2. description and quantity of the goods,
3. VAT-exclusive cost, and
4. rate and amount of VAT chargeable


The article covered the important rulings about the VAT account and the taxation timelines. There are no rules for the appearance of a VAT account.

However, there are details that must be added. In case of bad debts, a business is provided with relaxation from the HMRC. The timelines of taxation are important to consider since they allow the smooth functioning of business affairs.

If you require help related to accounting matters or If the VAT-related complicated matters add to your confusion, then do not worry!

We at Sterlinx assure you expert advice and may be able to assist you in managing important tasks while we take care of your accounting matters. So without wasting further time, contact us and avail the best opportunity.

Hire Us for Accounting?

Why not save time and hire us to do your books in the UK or globally?

Share This