If 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 like the UK don’t have rigid or set standards to keep vat records Http://www.vatcheck.com/vat/, you still must make sure that all relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays a visit.
In the last decade, a lot more countries including those within the European Union have shifted their tax system on services and goods to vat. This system taxes services and goods 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 may have turned into a vat registered trader as soon as your taxable sales might have hit the vat threshold limit of ?70,000 in the last 1 year.
When you become an integral 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 unique vat number which will need to be mentioned in each vat invoice that you’ll be required to generate with each sale. You will also have to display vat rates of each product or service sold to your clients. When you purchase goods or services from vat registered traders then you will also need to see if their invoices too follow the same format as per hmrc vat.
In addition, the hmrc will also specify the frequency of filing vat returns so that all vat that has been collected by you, on your sales can be paid to your government. Your vat returns will need 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 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 enable 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, and other books of accounts relevant to your business. In case you offer services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you will also need to clearly specify the classification of such services or goods in 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 need specific methods to maintain your required records.
Once you turn into a vat registered trader in the UK then you will need to follow vat rules and regulations that 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 very easy for you personally as well as the hmrc to get access to your vat records.