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What constitutes proper records for VAT?

POSTED BY: Karen Robertson

08 September 17

If you are VAT registered, then you need to be aware of the minimum record keeping requirements!

Proper VAT records include:

  • a record of sales and purchases, and
  • a separate VAT account.

Generally, a business must keep VAT business records for at least 6 years (or 10 years if they use the VAT MOSS service). By special permission, HMRC may allow you to keep some records for a shorter period. For example, if the 6-year rule causes you serious storage problems or undue expense.

The VAT records can be held on paper, electronically or as part of a software program. There are no specific VAT rules about using a computer. Records used for other tax purposes may need to be kept for longer periods.

There are financial penalties that can be levied for a failure to keep or produce the VAT records required by law.

Planning note:

Regarding the issue of a VAT sales invoice:

There is no requirement to issue a VAT invoice for retail supplies to unregistered businesses unless the customer requests a VAT receipt.

A simplified VAT invoice can be used for supplies of up to £250. There are also specific situations where a VAT invoice does not have to be issued, for example if your customer operates a self-billing arrangement.

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