If you have shifted over to vat or value added tax system then you need to keep vat accounting standards for quick access to VAT records. Although most eu countries including the UK don’t have rigid or set standards to keep vat records, you still need to ensure that relevant vat figures can be accessible in case the hmrc vat department asks for 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 system taxes goods and services 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 certainly may have turned into a vat registered trader once your taxable sales might 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’ll be issued a distinctive vat number that will have to be mentioned in each vat invoice that you will be needed to generate with each sale. Additionally, you will have to display vat rates of every products or services sold to your clients. When you purchase goods or services from vat registered traders then you will also have to see if their invoices too stick to the same format as specified by hmrc vat.
In addition, 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. In case you want to go in for any vat reclaim or vat refund then 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 United Kingdom, you’ll have to maintain up-to-date vat accounting records including bank accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, along with books of accounts relevant to your enterprise. In case you offer 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 services or goods 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 methods to maintain your required records.
As soon as you are a vat registered trader in the UK then you’ll need to follow vat regulations which have been specified by the hmrc vat department. These techniques are not very difficult and 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.