If you have shifted over 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 do not have rigid or set standards to keep vat records, you will still need to ensure that relevant vat figures are easily easily obtainable in case the hmrc vat department asks for them or pays a visit.
Over the past decade, a lot more countries including those from the EU have shifted their tax system on goods and services to vat. This method taxes services and goods each time there’s a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the United Kingdom then you might have converted into a vat registered trader as soon as your taxable sales would have hit the vat threshold limit of ?70,000 in the last 12 months.
When you become an integral part in 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 will be issued a unique vat number that will have to be mentioned in each vat invoice that you’ll be required to generate with each sale. You will also have to display vat rates of each products or services sold to your clients. When you purchase services or goods from vat registered traders 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 your 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 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 consistently.
In the United Kingdom, you will also 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, along with 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’ll also need to clearly specify the classification of those 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 need specific techniques to maintain the required records.
As soon as you are a vat registered trader in the United Kingdom then you will need to follow vat rules and regulations that have been specified by the hmrc vat department. These techniques are certainly not very difficult and also by maintaining proper vat accounting standards, it will become very easy for you as well as the hmrc to have access to your vat records.