Maintain vat accounting standards for easy access to vat records

In case you have shifted to vat or value added tax system you’ll need to keep vat accounting standards for easy entry to VAT records. Although most eu countries including the UK don’t have rigid or set standards to keep vat records, you still need to ensure that all 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 within the EU have shifted their tax system on services and goods 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’re a trader in the UK then you may have turned into a vat registered trader once 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 will be issued a unique 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 have to display vat rates of each product or service sold to your clients. When you purchase services or goods from vat registered traders you will also have to check if their invoices too follow the same format as per hmrc vat.

In addition, the hmrc will also specify the regularity of filing vat returns to ensure that all vat that’s been collected by you on your sales can 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 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 enable you to speedily complete all vat formalities consistently.

In the UK, you will also have to maintain up-to-date vat accounting records including banking accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, and other books of accounts relevant to your business. If you deal in services or goods that attract reduced vat rates, zero vat rates, or are vat exempt then you’ll also have to clearly specify the classification of those goods or services 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 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 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 as well as the hmrc to have access to your vat records.