Importance of Keeping VAT Records
For the government to offer services to its citizens, they need income. Different source act as the government source of income. This may include revenue generated from their natural resources. The common source of income to the government is the taxes. A tax is a small deduction made on every service provided. One of the most used forms of taxation is the value-added tax (VAT). This is the tax from goods purchased by individuals.
An organization or individual usually pays some taxes through the services they are provided with. Usually depending on the price of the commodity or service a certain percentage constitutes the VAT. The VAT is usually added to an amount of a service or a product. Thus the price of a commodity or service usually constitute the tax. The government has entirely benefited from the opening of VAT. VAT charges depending on the decided percentages. VAT is categorized as an indirect tax because individual consumers do not have to pay VAT in their tax declarations, but rather it is collected by the business selling the goods or services, and paid to the government by the company. Therefore it is usually essential to keep records of VAT by both the company and the government. Through this article one can look into the importance of maintaining the records of VAT.
Keeping of books of account, a record of all goods and services supplied by or to the registered person identifying the products and services, the suppliers or their agents, all invoices, tax invoices, credit notes and debit notes relating to the supplies made or received and other documents as are necessary to verify the entries in the books of account and the system and program documentation that describes the accounting system are some of the ways of keeping record of the VAT.
One can be ascertained liable to taxes by providing the records of VAT. To enable ascertainment by the leaders on the commitment to tax one has to keep records of the charges. Avoiding taxes is one of the criminal offenses in the country. Thus to prevent such scenarios one has to regularly keep records to validate his or her liability to taxes.
One can make for their tax returns efficiently with the singles of VAT. Tax returns are formulated annually by individuals and businesses. Thus keeping records will help an individual or business account and prepare their tax returns at the end of the year. Recording as well helps one to be able to claim all your entitlements/refunds. Refunds are usually such a tough thing to go about. Having records of all the taxes can assist one to be refunded easily without any inconveniences. There are other serval benefits of keeping records of VAT such as in cases where one is asked to prove the information provided in their tax return, reducing the risk of tax audits and adjustments, improving communication to resolve issues relating to disputed assessments or changes and helps one to avoid exposure to penalties.