Records you must keep
The fundamental guideline is to ensure the creation and maintenance of standard business records. There’s flexibility in how you organize these records, and commonly used bookkeeping and computer systems fulfill this criterion. However, records that constitute your ‘electronic account’ must be maintained digitally using ‘functional-compatible software.’
In addition to adhering to the general rule of record-keeping and any specific stipulations, it’s essential that your records are comprehensive, current, and enable accurate calculations of the VAT amount owed or reclaimable.
Special records for VAT
Two specific records are mandated for VAT purposes. These include:
1. The VAT account, is often derived from a routine business record detailing VAT liabilities or claims. If you are obligated to maintain digital records, this will serve as your electronic account.
2. A VAT invoice for transactions with other VAT-registered businesses. A ‘VAT invoice’ is simply the term used for an invoice that includes the necessary information as per VAT regulations. In most cases, standard commercial invoices will already contain the requisite information.
Business records
VAT law requires you to keep all your business records. Our view of business records is wide and will 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
- documentation relating to dispatches and acquisitions of goods to or from the UK or EU member if you are registered in Northern Ireland or relating to dispatches and acquisitions made before 1 January 2020 if you are registered in Great Britain
- documents or certificates supporting special VAT treatment such as relief on supplies to visiting forces or zero rating by certificate
- import and export documents
- 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
- VAT account (electronic account)
What a business record is will depend on the type of business you run. Youʼll always have to keep a VAT account and copies of invoices, but some of the other records may not be a normal record in your business. If that is the case you do not have to keep such a record just for VAT. But equally, some businesses will create additional business records and these must be kept and produced to HMRC when youʼre asked.
Keeping records
Generally, you must keep all your business records for VAT purposes for at least 6 years. Records that you use 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, or you need advice on records for other types of tax, then you should consult your accountant for guidance. We may be able to allow you to keep some records for a shorter period.
Article updated: 10 Aug 2023
