In case you have shifted to vat or value added tax system you’ll need to maintain vat accounting standards for quick access to VAT records. Although most eu countries like the UK don’t have rigid or set standards to maintain vat records, you will still must make sure that relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays a visit.
Over the past decade, a lot more countries including those within the European Union have shifted their tax system on goods and services to vat. This system taxes goods and services each time there’s a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you’re a trader in the United Kingdom then you might have turned into a vat registered trader as soon as your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 1 year.
When you become an integral part in the cycle of vat tax chain you will need to follow certain guidelines imposed by the HM Revenue and Customs department or hmrc department regarding vat accounting. You’ll be issued a unique vat number that will have to be mentioned in each vat invoice that you will be required to generate with each sale. You will also have to display vat rates of each products or services sold to the clients. When you purchase goods or services from vat registered traders you will also have to see if their invoices too stick to the same format as per hmrc vat.
Furthermore, the hmrc will even specify the regularity of filing vat returns to ensure that all vat that has been collected by you on your sales can be paid to your government. Your vat returns will have to provide a summary for vat paid on purchases and vat collected on taxable sales. In case you want to go into for any vat reclaim or vat refund then there are separate vat forms that need to be filled up and delivered with documentary proof. The hmrc offers several vat online services including online filing of vat returns which should enable you to speedily complete all vat formalities consistently.
In the United Kingdom, you will also have to maintain up-to-date vat accounting records such as bank accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, along with books of accounts highly relevant to your business. In case you deal in goods or services that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also have to clearly specify the classification of such services or goods within your records. There are many accounting schemes in vat like annual accounting scheme, cash accounting scheme, flat rate scheme, retail schemes, and second-hand goods scheme that will require specific methods to maintain your required records.
As soon as you turn into a vat registered trader in the UK then you’ll have to follow vat regulations which have been specified by the hmrc vat department. These techniques are certainly not very difficult and by maintaining proper vat accounting standards, it will become easy for you personally as well as the hmrc to have access to your vat records.