Maintain vat accounting standards for convenient access to vat records
If you have shifted over to vat or value added tax system you’ll need to maintain 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, you still must make sure that all relevant vat figures are easily accessible in case the hmrc vat department wants them or pays a visit.
Over the past decade, an increasing number of countries including those within the EU have shifted their tax system on goods and services to vat. This system taxes goods and services each time there’s a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you’re a trader in the United Kingdom then you may 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.
When you become an integral part within the cycle of vat tax chain 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’ll be needed to generate with each sale. Additionally, you will have to display vat rates of each product or service sold to your 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 specified by hmrc vat.
In addition, the hmrc will also specify the frequency of filing vat returns so that all vat that’s been collected by you on your sales might be paid to the government. Your vat returns will have to give a summary for vat paid on purchases and vat collected on taxable sales. In case you want 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 help you to speedily complete all vat formalities on a regular basis.
In the UK, you’ll have 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 relevant to your enterprise. In case you deal in services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you will also have to clearly specify the classification of such services or goods 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 methods to maintain the required records.
As soon as you are a vat registered trader in the United Kingdom then you will need to follow vat rules and regulations which have been specified by the hmrc vat department. These techniques are certainly not very difficult and by maintaining proper vat accounting standards, it will become easy for you as well as the hmrc to have access to your vat records.
