If you have shifted over to vat or value added tax system you’ll need to keep vat accounting standards for easy access to VAT records. Although most eu countries like the UK don’t have rigid or set standards to keep vat records vatcheck.com/vat/, you still need to ensure that relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays a visit.
Over the past decade, an increasing number of countries including those from the European Union have shifted their tax system on services and goods to vat. This method taxes services and goods every time there is a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you’re a trader in the United Kingdom then you certainly might have turned into a vat registered trader once your taxable sales would have hit the vat threshold limit of ?70,000 in the previous 12 months.
When 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 will be issued a distinctive vat number that will have to be mentioned in each vat invoice that you will now be needed to generate with each sale. Additionally, you will have to display vat rates of each product or service sold to your clients. When you purchase goods or services from vat registered traders you will also have to see if their invoices too stick to the same format as per 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 have to provide a summary for vat paid on purchases and vat collected on taxable sales. For those who like to go in 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 United Kingdom, you will also need to maintain up-to-date vat accounting records including banking 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 deal in goods or services that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also need to clearly specify the classification of those goods or services within 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 the required records.
As soon as you turn into a vat registered trader in the United Kingdom then you’ll have to follow vat rules and regulations which have been specified by the hmrc vat department. These methods are certainly not very difficult and by maintaining proper vat accounting standards, it will become easy for you and the hmrc to have access to your vat records.