What VAT Records Do I Need to Keep?

Introduction

If you're VAT-registered, you must keep accurate records of your business transactions and hold onto them for the right length of time. These records help you calculate the VAT you owe or can reclaim, and must be available when HMRC visits. This guide explains exactly what records you need to keep, how long to keep them, and what information your VAT invoices must show.

What Records You Must Keep

The basic rule is that you must create and keep normal business records. You don't have to keep records in a specific way, and most bookkeeping and computer systems will meet the requirements.

Your records must be:

• Complete
• Up to date
• Sufficient to allow you to calculate correctly the amount of VAT you have to pay or can claim back

Standard Business Records

VAT law requires you to keep all your business records. These typically include:

• Annual accounts, including profit and loss accounts
• Bank statements and paying-in slips
• Cash books and other account books
• Credit or debit notes you issue or receive
• Orders and delivery notes
• Purchase and sales books
• Purchase invoices and copy sales invoices
• Records of daily takings such as till rolls
• Relevant business correspondence
• Import and export documents (if applicable)
• Documentation relating to dispatches and acquisitions of goods to or from EU member states (for Northern Ireland businesses, or for Great Britain businesses relating to transactions made before 1 January 2020)
• Documents or certificates supporting special VAT treatment, such as relief on supplies to visiting forces or zero rating by certificate

What counts as a business record depends on the type of business you run. If certain records aren't normal for your business, you don't have to create them just for VAT purposes.

Special Records Required for VAT

There are two records specifically required for VAT:

The VAT account — This is usually based on a routine business record of VAT you owe or can claim. If you're required to keep digital records (for Making Tax Digital for VAT), this becomes your electronic account and must be kept digitally in functional compatible software.

VAT invoices — You must keep copies of every VAT invoice you issue, and retain all VAT invoices you receive. A VAT invoice is simply an invoice that contains certain information required by VAT rules.

How Long to Keep Your Records

You must keep all your business records for VAT purposes for at least 6 years. Records used for other tax purposes may need to be kept for longer periods.

If the 6-year rule causes you serious storage problems or undue expense, you can contact HMRC's VAT general enquiries to request permission to keep some records for a shorter period.

What a VAT Invoice Must Show

Only VAT-registered businesses can issue VAT invoices. If you're VAT-registered, you must issue a VAT invoice whenever you supply standard rate or reduced rate goods or services to another VAT-registered person. You normally must issue this within 30 days of the date you make the supply.

Required Information on VAT Invoices

Every VAT invoice you issue must show:

• A sequential number based on one or more series which uniquely identifies the document
• The time of the supply
• The date of issue of the document (where different to the time of supply)
• The name, address and VAT registration number of the supplier
• The name and address of the person to whom the goods or services are supplied
• A description sufficient to identify the goods or services supplied
• For each description, the quantity of goods or extent of services, the rate of VAT, and the amount payable excluding VAT (expressed in any currency)
• The gross total amount payable, excluding VAT (expressed in any currency)
• The rate of any cash discount offered
• The total amount of VAT chargeable (expressed in sterling)
• The unit price

Special Rules for Northern Ireland Businesses

If your business is based in Northern Ireland and you send an invoice to a person in an EU member state, you must also show:

• The letters 'GB' in front of your registration number for cross-border supplies
• The registration number of the recipient of the supply preceded by the alphabetical code of the relevant EU member state
• A reference to any new means of transport (where applicable)

Why VAT Invoices Matter

VAT invoices are crucial for both you and your customers:

• The copies you keep form an important part of your business records
• The VAT invoices you receive are the primary evidence for recovering VAT you've incurred as input tax
• Your customers need your VAT invoices as their primary evidence to recover the VAT you've charged them

You should keep all VAT invoices in a way that allows you to find them easily when asked by HMRC.

Electronic Invoicing

You can issue invoices electronically, which offers several advantages over paper invoicing, including:

• Structured data for effective auditing
• Improved traceability of orders
• Reduction in paper documents, reducing storage and handling costs
• Quick access and retrieval
• Improved cash flow
• Better security and easier dispute handling

Electronic invoices must meet the same requirements as paper invoices in terms of the information they contain.

HMRC Compliance Checks

HMRC will visit you from time to time, usually at your main place of business, to check your records. They'll normally specify which records they want to see ahead of a visit, and those records must be available when requested.

Sources

• Record keeping (VAT Notice 700/21)

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.