In case you have shifted to vat or value added tax system you’ll need to keep vat accounting standards for quick entry to VAT records. Although most eu countries like the UK don’t have rigid or set standards to keep vat records, you will still need to ensure that all relevant vat figures are easily accessible in case the hmrc vat department asks for them or pays a visit.
In the last decade, a lot more countries including those from the European Union have shifted their tax system on services and goods to vat. This method taxes goods and services every 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 might have converted into a vat registered trader as soon as your taxable sales might have hit the vat threshold limit of ?70,000 in the previous 12 months.
Once you become an integral part within the cycle of vat tax chain then you will need to follow certain guidelines imposed by the HM Revenue and Customs department or hmrc department regarding vat accounting. You will be issued a distinctive vat number that 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 the clients. Whenever you purchase services or goods from vat registered traders then you will also need to check if their invoices too stick to the same format as per 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 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 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’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, along with 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’ll also have to clearly specify the classification of those goods or services within your records. There are many accounting schemes in vat such as annual accounting scheme, cash accounting scheme, flat rate scheme, retail schemes, and second-hand goods scheme that will need specific methods to maintain your required records.
As soon as you are a vat registered trader in the UK then you will have to follow vat rules and regulations that have been specified by the hmrc vat department. These methods are not very difficult and also by maintaining proper vat accounting standards, it will become easy for you as well as the hmrc to get access to your vat records.