In case you have shifted over to vat or value added tax system then you need to maintain vat accounting standards for quick access to VAT records. Although most eu countries like the UK do not have rigid or set standards to keep vat records, you will still need to ensure that all relevant vat figures are easily 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 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 transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the United Kingdom then you certainly may 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 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’ll be issued a unique vat number that will have 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 every products or services sold to the clients. Whenever you purchase goods or services 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 frequency of filing vat returns to ensure that all vat that has been collected by you, on your sales can be paid to the 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 a 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 which should help you to speedily complete all vat formalities on a regular basis.
In the United Kingdom, you will also have to maintain up-to-date vat accounting records such as bank accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, and other books of accounts highly relevant to your enterprise. In case you offer goods or services 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 various 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 the required records.
Once you turn into a vat registered trader in the United Kingdom then you’ll need to follow vat rules and regulations which have been specified by the hmrc vat department. These techniques are certainly not really hard and by maintaining proper vat accounting standards, it will become very easy for you and the hmrc to get access to your vat records.