In case you have shifted over to vat or value added tax system then you need to keep vat accounting standards for quick entry to VAT records. Although most eu countries like the UK don’t have rigid or set standards to maintain vat records, you still must make sure that relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays you a visit.
In the last decade, an increasing number of countries including those within the European Union have shifted their tax system on services and goods 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 may 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 an integral 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’ll be issued a unique vat number which will need to be mentioned in each vat invoice that you will be required to generate with each sale. You will also ought to display vat rates of every products or services sold to the clients. When you purchase services or goods from vat registered traders then you will also have to check if their invoices too stick to the same format as specified by hmrc vat.
Furthermore, the hmrc will also 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 provide a summary for vat paid on purchases and vat collected on taxable sales. For those who like 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 which should enable you to speedily complete all vat formalities on a regular basis.
In the UK, you will also have to maintain up-to-date vat accounting records including bank 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 in your records. There are various accounting schemes in vat such as annual accounting scheme, cash accounting scheme, flat rate scheme, retail schemes, and second-hand goods scheme that will need specific methods 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 methods are not really hard and also by maintaining proper vat accounting standards, it will become easy for you personally as well as the hmrc to get access to your vat records.