If you have shifted over to vat or value added tax system you’ll need to keep vat accounting standards for quick entry to VAT records. Although most eu countries like the UK do not have rigid or set standards to keep vat records, you still must make sure that relevant vat figures are easily easily obtainable in case the hmrc vat department asks for them or pays you a visit.
Over the past decade, an increasing number of countries including those within the EU have shifted their tax system on goods and services to vat. This method taxes services and goods each time there is a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the UK then you might have converted into a vat registered trader as soon as your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 12 months.
Once you become an integral part within 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’ll be issued a unique vat number that will need to be mentioned in each vat invoice that you will now be required to generate with each sale. You will also ought to display vat rates of each product or service sold to the 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 specified by hmrc vat.
Furthermore, the hmrc will also specify the frequency 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 provide a summary for vat paid on purchases and vat collected on taxable sales. In case you want to go in for any vat reclaim or vat refund then there are separate vat forms that should be filled up and delivered with documentary proof. The hmrc offers several vat online services including online filing of vat returns and this should help you to speedily complete all vat formalities consistently.
In the UK, 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, and other books of accounts highly 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 need 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 techniques to maintain the required records.
Once you are a vat registered trader in the United Kingdom then you will have to follow vat rules and regulations that have been specified by the hmrc vat department. These techniques are not really hard and by maintaining proper vat accounting standards, it will become easy for you and the hmrc to have access to your vat records.