If you have shifted to vat or value added tax system then you need to maintain vat accounting standards for easy entry to VAT records. Although most eu countries like the UK don’t have rigid or set standards to maintain vat records, you will still must make sure that relevant vat figures can be easily obtainable in case the hmrc vat department wants them or pays you a visit.
In the last decade, an increasing number of countries including those within the EU have shifted their tax system on services and goods to vat. This method taxes goods and services each time there is a vat verification transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the United Kingdom then you may have turned into a vat registered trader as soon as your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 12 months.
Once you become part within 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 will be issued a distinctive vat number which will need to be mentioned in each vat invoice that you will be required to generate with each sale. You will also ought to display vat rates of each products or services sold to the clients. When you purchase goods or services from vat registered traders you will also have to see if their invoices too stick to the same format as per hmrc vat.
Furthermore, the hmrc will also specify the frequency 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 a vat reclaim or vat refund then 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 enable you to speedily complete all vat formalities consistently.
In the UK, you will also need 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 business. If you deal in services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also need to clearly specify the classification of those services or goods in 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 need specific techniques to maintain your required records.
As soon as you are a vat registered trader in the United Kingdom then you will have to follow vat rules and regulations which have been specified by the hmrc vat department. These methods are not really hard and by maintaining proper vat accounting standards, it will become very easy for you personally and the hmrc to get access to your vat records.