If you have shifted to vat or value added tax system you’ll need to keep vat accounting standards for easy entry to VAT records. Although most eu countries including 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 accessible in case the hmrc vat department asks for them or pays you a visit.
In the last decade, a lot more countries including those from the EU have shifted their tax system on services and goods to vat. This method taxes services and goods every time there is 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 may have turned into a vat registered trader once your taxable sales would have hit the vat threshold limit of ?70,000 in the last 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’ll be issued a distinctive vat number that will need to be mentioned in each vat invoice that you will be needed to generate with each sale. Additionally, you will ought to display vat rates of each products or services sold to the clients. Whenever you purchase services or goods from vat registered traders you will also have to check if their invoices too stick to the same format as per hmrc vat.
Furthermore, the hmrc will even 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 in for any 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, and other books of accounts highly relevant to your enterprise. In case you deal in services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also have 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 need specific techniques to maintain your required records.
As soon as you turn into a vat registered trader in the United Kingdom then you’ll need to follow vat rules and regulations that 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 and the hmrc to have access to your vat records.