If you have shifted 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 maintain vat records, you will still need to ensure that relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays you a visit.
Over the past decade, a lot more countries including those within the European Union have shifted their tax system on services and goods to vat. This method taxes goods and services 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 may have converted into a vat registered trader once your taxable sales might have hit the vat threshold limit of ?70,000 in the last 12 months.
Once 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 unique vat number which will have to be mentioned in each vat invoice that you will now be needed to generate with each sale. You will also ought to display vat rates of every products or services sold to the clients. When you purchase services or goods from vat registered traders then you will also need to see if their invoices too follow the same format as per hmrc vat.
In addition, the hmrc will even specify the frequency of filing vat returns to ensure that all vat that has 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. For those who like to go into for a 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 enable you to speedily complete all vat formalities consistently.
In the United Kingdom, 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 goods or services that attract reduced vat rates, zero vat rates, or are vat exempt then you will 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 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 certainly not really hard and by maintaining proper vat accounting standards, it will become very easy for you personally and the hmrc to get access to your vat records.