If 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 don’t have rigid or set standards to maintain 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.
Over the past decade, a lot more countries including those from the European Union have shifted their tax system on goods and services to vat. This method taxes goods and services every time there is a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the UK then you might have converted 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 then 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 distinctive vat number that will have to be mentioned in each vat invoice that you will now be needed 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 services or goods from vat registered traders you will also need to see if their invoices too stick to the same format as specified by hmrc vat.
Furthermore, the hmrc will even specify the regularity of filing vat returns so 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 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 have to maintain up-to-date vat accounting records including bank accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, along with 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 have to clearly specify the classification of such goods or services in 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 require specific methods to maintain your required records.
As soon as you are a vat registered trader in the UK then you will have to follow vat rules and regulations that have been specified by the hmrc vat department. These methods are certainly 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.