In case you have shifted over to vat or value added tax system you’ll need to maintain vat accounting standards for easy access to VAT records. Although most eu countries like the UK do not have rigid or set standards to maintain vat records, you still must make sure that all relevant vat figures can be accessible 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 goods and services to vat. This system taxes services and goods each time there’s a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you’re a trader in the United Kingdom then you might have converted into a vat registered trader once your taxable sales would have hit the vat threshold limit of ?70,000 in the last 12 months.
When you become an integral part within the cycle of vat tax chain 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 unique vat number which will have 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 every product or service sold to your clients. When you purchase goods or services from vat registered traders you will also have to check 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 has been collected by you on your sales might 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. For those who like to go into for any vat reclaim or vat refund 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 and this should help 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 such as banking accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, and other 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 will also need to clearly specify the classification of such goods or services within 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 techniques to maintain the required records.
As soon as you are a vat registered trader in the United Kingdom then you will have to follow vat 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 very easy for you personally and the hmrc to have access to your vat records.