In case you have shifted to vat or value added tax system then you need to keep vat accounting standards for quick access to VAT records. Although most eu countries including the UK don’t have rigid or set standards to maintain vat records, you still need to ensure that relevant vat figures can be accessible 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 is a vatverification transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you’re a trader in the UK then you might have turned into a vat registered trader once your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 1 year.
When you become part in the cycle of vat tax chain you will have 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’ll be needed to generate with each sale. Additionally, you will ought to display vat rates of every products or services sold to your clients. When you purchase services or goods from vat registered traders then you will also need to check if their invoices too follow the same format as per hmrc vat.
In addition, the hmrc will even specify the regularity of filing vat returns so that all vat that has been collected by you, on your sales might be paid to your 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 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 and this should enable you to speedily complete all vat formalities on a regular basis.
In the United Kingdom, you will also need 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 relevant to your enterprise. 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 such goods or services 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 are a vat registered trader in the United Kingdom then you will need to follow vat regulations that have been specified by the hmrc vat department. These methods are not very difficult and also by maintaining proper vat accounting standards, it will become very easy for you personally and the hmrc to get access to your vat records.