If you have shifted to vat or value added tax system you’ll need to maintain vat accounting standards for quick access to VAT records. Although most eu countries like the UK do not have rigid or set standards to maintain vat records Vatcheck-com/vat/, you will still must make sure that all relevant vat figures can be easily obtainable in case the hmrc vat department wants them or pays a visit.
Over the past decade, an increasing number of countries including those from the EU 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 UK then you might have turned into a vat registered trader as soon as 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 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’ll now be required to generate with each sale. You will also have to display vat rates of each products or services sold to the clients. Whenever you purchase goods or services from vat registered traders then you will also need to see if their invoices too stick to the same format as specified by hmrc vat.
Furthermore, the hmrc will also specify the frequency 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 need to provide a summary for vat paid on purchases and vat collected on taxable sales. In case you want to go into 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 which should help you to speedily complete all vat formalities consistently.
In the UK, you’ll 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 highly relevant to your enterprise. In case you deal in goods or services 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 in 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 need specific methods to maintain your required records.
As soon as you are a vat registered trader in the UK then you will need to follow vat regulations which 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 personally and the hmrc to get access to your vat records.