In case 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 do not have rigid or set standards to maintain vat records, you still need to ensure that all relevant vat figures can be 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 goods and services to vat. This system taxes services and goods each time there’s a vat verification transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the UK then you 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.
Once you become an integral part within the cycle of vat tax chain 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. You will also have to display vat rates of each products or services sold to your clients. Whenever you purchase services or goods from vat registered traders 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 to ensure 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. In case you want to go in for a vat reclaim or vat refund 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 consistently.
In the United Kingdom, you’ll 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 business. In case you offer services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also have to clearly specify the classification of such services or goods within 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 require specific techniques to maintain your required records.
As soon as you are a vat registered trader in the United Kingdom then you’ll need to follow vat 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 and the hmrc to get access to your vat records.