If you have shifted to vat or value added tax system you’ll need to maintain vat accounting standards for quick entry to VAT records. Although most eu countries like the UK do not have rigid or set standards to maintain vat records, you will still must make sure that all relevant vat figures can be easily obtainable in case the hmrc vat department wants them or pays a visit.
In the last decade, a lot more countries including those from the EU have shifted their tax system on goods and services to vat. This system 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 once your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 12 months.
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 need to be mentioned in each vat invoice that you’ll be needed to generate with each sale. Additionally, you will have to display vat rates of each products or services sold to your clients. Whenever you purchase goods or services from vat registered traders then you will also have to see if their invoices too follow the same format as per hmrc vat.
Furthermore, the hmrc will even 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 your government. Your vat returns will have to give 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 and this should enable you to speedily complete all vat formalities on a regular basis.
In the UK, you’ll 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 relevant to your enterprise. If you offer services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you will also need to clearly specify the classification of such goods or services 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.
Once you are a vat registered trader in the UK then you’ll have to follow vat rules and regulations which have been specified by the hmrc vat department. These techniques are not really hard and also by maintaining proper vat accounting standards, it will become easy for you and the hmrc to have access to your vat records.