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VAT Records Rules and Best Practices

Businesses must keep VAT records as well as general business records. Check a list of files and documents your business may need to have available for HMRC inspection.

VAT RECORDS LIST: Business documentation you must keep includes:

  • A copy of all invoices the company issues and receives. This applies to business hard copies and electronic software versions.
  • Situations where the customer prepares the invoice. HM Revenue and Customs refer to this as self-billing agreements.
  • Client name, their address and Value Added Tax number of any self-billing suppliers.
  • All business debit and Credit notes.
  • Records of any Importation and Exportation conducted by the business.
  • A record of items that do not involve reclaiming VAT. An example would be payments made for business entertainment.
  • Records of items that are gifts or used for your own personal use.
  • All records of zero-rated, reduced, or tax exempt items that the company buys or sells.
  • The HMRC VAT account set up and run by the business.

Note: Companies that supply digital services using VAT MOSS within the EU must keep extra records.

All the general business operating records need to get kept on file for at least six (6) years. It also includes bank statements, cash books, cheque stubs, paying-in slips, and till rolls.

Inspectors from HM Revenue and Customs often make a tax compliance check on businesses. That means they will check the company records to ensure the business pays the right amount of tax.

Special Rules for Retailers

As a retailer, you do not have to issue an invoice unless a customer requests one. But, the business must keep copies if any customers ask for one and you issue it.

Note: A simplified invoice will suffice any time the sales price is less than £250 for supplies sold.

Issuing Debit and Credit Notes

The business issues a credit or debit note to settle any balance of payments if you return goods to a supplier. The same can also apply any time a customer brings returned goods back to your business.

In these cases you must keep all original invoices with the credit or debit notes. You should also record the transactions according to business VAT account rules.

Rules for VAT Records Management in the United Kingdom