Maintain vat accounting standards for easy entry to vat records

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 don’t have rigid or set standards to keep vat records, you will still must make sure that relevant vat figures can be easily obtainable in case the hmrc vat department asks for them or pays you a visit.

In the last decade, an increasing number of countries including those within the EU have shifted their tax system on services and goods to vat. This system taxes services and goods each time there’s a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you’re a trader in the UK then you may 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 1 year.

Once you become an integral part in the cycle of vat tax chain then 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 unique vat number which will need to be mentioned in each vat invoice that you will now 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 you will also need to see if their invoices too follow 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 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. For those who like to go into for any vat reclaim or vat refund then 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 UK, you’ll have to maintain up-to-date vat accounting records such as bank accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, along with books of accounts relevant to your business. If you deal in goods or services that attract reduced vat rates, zero vat rates, or are vat exempt then you will also need 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 require specific methods to maintain the required records.

Once you turn into a vat registered trader in the UK then you will have to follow vat 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 as well as the hmrc to get access to your vat records.