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 do not have rigid or set standards to keep vat records, you will still need to ensure that relevant vat figures can be accessible in case the hmrc vat department wants them or pays you a visit.
Over the past decade, a lot more countries including those within the EU have shifted their tax system on goods and services to vat. This system taxes goods and services every time there’s a vat verification transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the United Kingdom then you may have turned into a vat registered trader as soon as your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 1 year.
Once you become an integral part within 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 that will have to be mentioned in each vat invoice that you will now be required to generate with each sale. You will also have to display vat rates of every products or services sold to your clients. Whenever you purchase services or goods from vat registered traders you will also have to see if their invoices too follow the same format as specified by hmrc vat.
In addition, 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 need to provide a summary for vat paid on purchases and vat collected on taxable sales. In case you want to go in 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 help you to speedily complete all vat formalities consistently.
In the United Kingdom, you will also need to maintain up-to-date vat accounting records including bank accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, and other books of accounts 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 will also have to clearly specify the classification of those goods or services in your records. There are many accounting schemes in vat like 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 United Kingdom then you’ll need to follow vat regulations which have been specified by the hmrc vat department. These techniques are not very difficult and also by maintaining proper vat accounting standards, it will become easy for you personally as well as the hmrc to have access to your vat records.