Maintain vat accounting standards for easy entry to vat records
If you have shifted over to vat or value added tax system then you need to maintain vat accounting standards for quick entry to VAT records. Although most eu countries like the UK don’t have rigid or set standards to maintain vat records, you still need to ensure that relevant vat figures can be easily obtainable in case the hmrc vat department wants them or pays a visit.
Over the past decade, a lot more countries including those from the European Union have shifted their tax system on goods and services to vat. This system taxes services and goods every time there is a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the United Kingdom then you certainly may have converted into a vat registered trader once your taxable sales might have hit the vat threshold limit of ?70,000 in the last 12 months.
When you become 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’ll be issued a distinctive vat number that will need 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 your clients. When you purchase services or goods from vat registered traders then you will also have to check 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 to ensure that all vat that’s been collected by you on your sales might 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 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 which 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 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. If you deal in services or goods 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 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 the required records.
As soon as you are a vat registered trader in the UK then you’ll have to follow vat rules and regulations which have been specified by the hmrc vat department. These methods are certainly not really hard and by maintaining proper vat accounting standards, it will become very easy for you and the hmrc to have access to your vat records.