If you have shifted to vat or value added tax system you’ll need to keep vat accounting standards for easy access to VAT records. Although most eu countries including the UK do not have rigid or set standards to maintain vat records, you will still need to ensure that relevant vat figures are easily accessible in case the hmrc vat department asks for them or pays a visit.
In the last decade, an increasing number of countries including those from the European Union have shifted their tax system on goods and services to vat. This system taxes goods and services every time there is 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 converted into a vat registered trader as soon as your taxable sales might have hit the vat threshold limit of ?70,000 in the last 12 months.
When you become part in the cycle of vat tax chain then you will need to follow certain guidelines imposed by the HM Revenue and Customs department or hmrc department regarding vat accounting. You will be issued a distinctive vat number that will need to be mentioned in each vat invoice that you will now be needed to generate with each sale. Additionally, you will ought to display vat rates of each products or services sold to your clients. Whenever you purchase goods or services from vat registered traders you will also have to check if their invoices too follow the same format as specified by hmrc vat.
Furthermore, the hmrc will even specify the frequency of filing vat returns to ensure that all vat that’s been collected by you on your sales might be paid to the government. Your vat returns will have to give a summary for vat paid on purchases and vat collected on taxable sales. For those who like to go into for a 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 help you to speedily complete all vat formalities on a regular basis.
In the United Kingdom, you’ll need to maintain up-to-date vat accounting records including banking accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, along with books of accounts relevant to your business. If you offer services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also have to clearly specify the classification of those services or goods within your records. There are many accounting schemes in vat such as annual accounting scheme, cash accounting scheme, flat rate scheme, retail schemes, and second-hand goods scheme that will require specific techniques to maintain your required records.
As soon as you turn into a vat registered trader in the UK then you will need to follow vat rules and regulations which have been specified by the hmrc vat department. These techniques are certainly not very difficult and also by maintaining proper vat accounting standards, it will become very easy for you and the hmrc to have access to your vat records.