In case you have shifted over to vat or value added tax system then you need to keep vat accounting standards for easy access to VAT records. Although most eu countries including the UK do not have rigid or set standards to maintain vat records, you will still need to ensure that relevant vat figures can be accessible in case the hmrc vat department asks for them or pays a visit.
In the last decade, a lot more countries including those from the European Union have shifted their tax system on goods and services to vat. This method taxes services and goods every time there's a transaction, thus raising revenues for governments while ensuring minimal tax leaks. If you are a trader in the UK then you certainly might have converted into a vat registered trader as soon as your taxable sales would have hit the vat threshold limit of ?70,000 in the last 1 year.
When you become part within 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 which will need to be mentioned in each vat invoice that you will now be required to generate with each sale. Additionally, you will have to display vat rates of each products or services sold to your clients. When you purchase goods or services 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 also specify the frequency of filing vat returns to ensure that all vat that has been collected by you on your sales might be paid to the 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 a 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 and this should enable you to speedily complete all vat formalities consistently.
In the UK, you'll need to maintain up-to-date vat accounting records such as banking accounts, profit and loss accounts, cash books, sales and purchase books, delivery notes, and other books of accounts highly relevant to your business. In case you offer goods or services 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 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 turn into a vat registered trader in the UK then you'll have to follow vat regulations which have been specified by the hmrc vat department. These techniques 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.