How Should I Keep Records for VAT?

Every business needs to keep records and it’s even more important when you’re VAT- registered. 

Unless exempt, VAT-registered businesses must keep some VAT business records digitally and submit their VAT returns using Making Tax Digital compatible software. You can find a list of these on GOV.UK. 

It’s important to keep copies of all the VAT purchase and sales invoices you send and receive and any credit or debit notes. 

Only VAT registered businesses can issue VAT invoices. You must give a VAT invoice to a VAT-registered customer for goods or services charged at either the standard rate of twenty per cent, the reduced rate of five per cent or for some zero–rated supplies outside the UK. 

Invoices must include certain information including:  

  • Your business details,
  • Your VAT number,  
  • Your customer’s details,
  • A description of the goods or services supplied,  
  • And the amount charged before and after VAT was added. 

You must also keep a separate electronic record of the VAT you charge and the VAT you pay on purchases. This is known as a VAT account. It’s a summary of the:

  • VAT charged on any sales,
  • VAT paid on any purchases,  
  • VAT you owe to HMRC
  • VAT you can reclaim from HMRC. 

These electronic records will be used to complete your VAT return, so it’s important these are accurate and complete. 

You must keep your records for at least six years. But if you used the VAT MOSS service, you must keep your records for 10 years. 

You can find out more about VAT record keeping and Making Tax Digital on GOV.UK.