If you have shifted over 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 don’t have rigid or set standards to maintain vat records, you will still must make sure 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 services and goods to vat. This method taxes services and goods every time there is a vat verification transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the UK then you certainly 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 12 months.
Once 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’ll now be needed to generate with each sale. Additionally, you will ought to display vat rates of every product or service sold to your clients. Whenever 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 per hmrc vat.
Furthermore, the hmrc will even specify the regularity of filing vat returns so that all vat that’s been collected by you, on your sales can 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 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 consistently.
In the United Kingdom, you will also have 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 highly relevant to your enterprise. In case you deal in goods or services that attract reduced vat rates, zero vat rates, or are vat exempt then you will also have to clearly specify the classification of those goods or services 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.
As soon as you are a vat registered trader in the United Kingdom then you will need to follow vat rules and regulations which have been specified by the hmrc vat department. These methods are not very difficult and by maintaining proper vat accounting standards, it will become easy for you as well as the hmrc to get access to your vat records.