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 need to ensure that relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays a visit.
Over the past decade, an increasing number of countries including those within the European Union have shifted their tax system on services and goods to vat. This method taxes goods and services 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 certainly might have turned 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 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 have to be mentioned in each vat invoice that you will now be needed to generate with each sale. You will also have to display vat rates of each product or service sold to the clients. Whenever you purchase goods or services from vat registered traders then you will also have to see if their invoices too stick to the same format as specified by hmrc vat.
Furthermore, the hmrc will also 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 need to provide a summary for vat paid on purchases and vat collected on taxable sales. In case you want to go into 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 and this should help you to speedily complete all vat formalities consistently.
In the UK, you’ll need to maintain up-to-date vat accounting records such as banking accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, along with books of accounts highly relevant to your business. If 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 need specific techniques to maintain your required records.
As soon as you turn into a vat registered trader in the United Kingdom then you will need to follow vat 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 easy for you as well as the hmrc to get access to your vat records.