The books you need to keep for VAT

6 April 2009

1. What records must I keep for VAT?
   

   The basic rule is that you must create and retain normal business records.  You do not have to keep records in a set way and most bookkeeping and computer systems will meet this requirement.

   Apart from keeping business records and the special requirements explained in paragraph 2, your records should be complete, up to date and allow you to calculate correctly the amount of VAT that you have to pay or can claim from HM Revenue & Customs.
   

2. Are there special records for VAT?
   Yes.  There are two records that are specifically required for VAT.  These are:
   • The VAT account.  In many cases this will be based on a routine business record of VAT owed or claimable.
   • A VAT invoice for supplies to other VAT registered businesses.  A 'VAT invoice' is just the term for an invoice which contains some information required by VAT rules.  Most commercial invoices will already contain the right information.
     
3. What do business records include?
   VAT law requires you to keep all your business records 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/acquisitions of goods to/from EC Member States
   • 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
     
     What is a business record will depend on the type of business you run.  You will always have to keep a VAT account and copies of invoices but some of the other records above may not be a normal record in your business.  If that is the case you don't have to keep such a record just for VAT.  But equally, some businesses will create additional business records and these must be retained and produced to HMRC on request
     
     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 our advice service.  We may be able to allow you to keep some records for a shorter period.
     
4. What additional records might I have to keep?
   HM Revenue & Customs may direct some businesses to keep additional records.  This is were they have reasonable grounds to believe that such records might assist in identifying supplies on which VAT is at particular risk of going unpaid.  This will most commonly arise with supplies of mobile phones and computer chips, but is not limited to these types of supplies.  Failure to comply with one of these directions can result in a financial penalty.
   
   You have a right to appeal against the issue of a direction and against the imposition of any penalty for non-compliance.
   
5. Can I keep my records on computer?
   Yes.  It is common for business records and accounts to be kept on a computer and there are no special VAT rules about using a computer.
   
6. Can I keep my records on microfilm?
   You can keep your records on microfilm, or microfiche, provided that copies can be easily produced and that there are adequate facilities for allowing Revenue officers to view them when required.  You do not have to apply in advance to keep your records in this way, but we may require you to keep them in a different format if these requirements are not met.
   
7. What if I fail to keep or produce records?
   There is a financial penalty for a failure to keep or produce the records required by law.
   
   You can request a review of any penalty or appeal to the independent VAT and duties Tribunal.
   
8. What happens to my records if I sell or transfer my business as a going concern?
   In most circumstances the seller of the business will retain the business records. When this happens, the seller must make available to the buyer any information the buyer needs to comply with his VAT obligations.
   
   Where the buyer takes on the seller's VAT registration number the seller must transfer the records to the buyer, unless the seller needs to retain the records.
   
9. Who should I turn to for help?
   The partners at Alexander Bursk will assist in advising on all aspects of record keeping and bookkeeping.