How to keep VAT records
If you are VAT-registered:
- You have to record the VAT on all purchases and
sales your business makes.
- You also need to keep a VAT account, which shows
how much VAT you owe HMRC, or vice versa.
- You are responsible for making sure all records are
accurate, complete and up-to-date.
- They also need to be easily accessible for a VAT
inspection - HMRC should be able to see where you got the
figures on your VAT return from.
- You can keep records on paper or on a computer,
but for the VAT account a computer spreadsheet will generally be
much easier to maintain as it does the calculations for you.
- There is no official way to keep your records -
use the method that suits you best.
Checklist: what to keep a record of
You need to keep all the following for your VAT records:
- A VAT account (see below).
- Copies of all sales invoices you issue.
- If you're a retailer, you only need to keep copies for
items worth more than £250, or if the customer has
specifically asked for a VAT receipt.
- All invoices for items or services you buy (originals, not
- Copies of all credit and debit notes you issue.
- All credit notes and debit notes you receive from other
customers and businesses (originals, not copies).
- Records of things you've bought which you can't reclaim VAT
for, such as business entertainment.
- All documents relating to VAT-relief or zero-rating
- Records of anything you export.
- Any corrections you make to your VAT accounts or invoices.
- Any self-billing agreements you make as a supplier, and copies
of any self-billing agreements you make as a customer.
- Records of any items you give to or take from the business for
priVATe use, including VAT rate.
The VAT account
- Your VAT account needs to record all items or services that you
buy or sell, their price and the VAT charged on them.
- Unless you're very comfortable adding up pages and pages of a
book, it's best to keep these figures in a spreadsheet.
- Show things you've bought in three columns: net price, VAT
charged and total for each item. Then either another spreadsheet or
separate from the other columns for what you've sold, again showing
net price, VAT charged and total for each item in separate
- Your VAT account also keeps the running total of VAT you've
paid, VAT you've charged, and your resulting VAT balance.
- Use the sum total function on the spreadsheet to keep running
totals of the total VAT payable (the total you charged) and the
total VAT claimable (the total you paid).
- You can then deduct the claimable from the payable to see
the total you owe HMRC - or, if the result is negative, what
they owe you. This corresponds with the figures on your VAT
- You also need to show anything you're paying on behalf of your
suppliers or vice versa and any corrections and errors made.
- If you use an annual accounting system, you also
need to record balancing payments.
How long do I need to keep VAT records for?
Six years. If you're using a computer, print out paper copies of
your records at the end of each year in case something happens to
What if my customers owe me money? Do I still have to pay
VAT on that?
Yes, unless you're using the cash accounting scheme.
What happens when you have a VAT inspection?
HMRC will call to give you notice of when they're coming and what
you need to show. You need to make sure all the records explained
above are completely up-to-date.
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