What Records Do You Need to Keep for VAT?
- Aug 28
- 8 min read
VAT record keeping might not be the most exciting part of running a business in the UK, but it is one of those jobs that can save you a lot of stress later.
If you're VAT registered, HMRC expects you to keep enough information to show how you calculated your VAT Return. This includes records of your sales, purchases, VAT invoices and VAT account.
The good news is that you don't need a complicated filing cabinet full of paperwork. With modern accounting software, much of this can be kept digitally.
In this guide, we'll explain what VAT records you need to keep, how long you need to keep them and some simple ways to stay organised.
Why Is VAT Record Keeping Important?
Good records help you:
Complete your VAT Returns accurately
Support VAT you've reclaimed on purchases
Check how much VAT you owe HMRC
Find mistakes more easily
Respond to questions if HMRC checks your business
Understand how much VAT your business is paying and collecting
HMRC says your records should be complete, up to date and detailed enough to allow you to calculate the correct amount of VAT you need to pay or reclaim.
It is therefore not simply about keeping receipts in a drawer and hoping for the best.
Your records should create a clear trail from your underlying business transactions through to the figures reported on your VAT Return.
What VAT Records Do You Need to Keep?
There are several important records that VAT-registered businesses should keep.
1. Sales Invoices
You should keep copies of the VAT invoices you issue to your customers.
This includes invoices that have been paid, unpaid, cancelled, or issued in error
HMRC specifically says VAT-registered businesses must keep copies of all sales invoices they issue, including cancelled or incorrect invoices.
Example
You send a customer an invoice for £1,200 including VAT. Later, you realise the invoice contains an error and cancel it before sending a replacement. Don't simply delete the original invoice. Keep a record of the cancelled invoice and the replacement so there is a clear audit trail.
2. Purchase Invoices
You should also keep the VAT invoices you receive from suppliers. These are particularly important when you are reclaiming VAT.
For example, your business buys a laptop for £1,200 including VAT. If the purchase qualifies for VAT recovery, you need appropriate VAT evidence to support the input VAT you're claiming.
HMRC states that you cannot reclaim VAT using an invalid invoice, pro-forma invoice, statement or delivery note.
Tip: Don't just record the amount paid in your accounting software. Keep the supporting invoice as well.
3. Your VAT Account
A VAT account is one of the most important records you need to maintain. It records the VAT you've:
Charged your customers
Paid on purchases
Owed to HMRC
Reclaimed from HMRC
You use these figures to prepare your VAT Return.
HMRC does not prescribe one particular format for a VAT account, but it must contain enough information to show the relevant VAT figures.
If you're using accounting software such as Xero, QuickBooks or FreeAgent, much of this information can be generated from your bookkeeping records.
4. Credit Notes and Debit Notes
Don't forget about transactions that change the value of an original invoice.
For example:
A customer is originally invoiced £2,000 plus VAT, but later receives a £500 refund. A credit note may be needed to reflect the reduction.
You should keep copies of credit and debit notes you issue and records of those you receive. HMRC says these documents should be recorded and retained because they can change the amount of VAT due.
5. Bank Statements and Other Business Records
VAT records aren't limited to invoices. You should also keep normal business records that help support your VAT figures. These can include:
Bank statements
Cash books
Till rolls
Paying-in slips
Purchase and sales records
Orders
Delivery notes
Relevant business correspondence
The exact records you'll need will depend on the type of business you operate. For example, a shop may have till records and daily takings, while a consultant may mainly have sales invoices, purchase invoices and bank records.
6. Import and Export Records
If your business buys or sells goods internationally, you may have additional records to keep. These could include documentation relating to:
Imports
Exports
Movement of goods
Customs
Transport
Overseas transactions
International VAT rules can become complicated, particularly when you're dealing with different countries and types of transactions. If your business imports or exports regularly, don't assume your normal UK VAT records are enough.
7. Records for Special VAT Schemes
If you're using a special VAT scheme, you may have additional record-keeping requirements.
For example, businesses using the Flat Rate Scheme, Cash Accounting Scheme, Annual Accounting Scheme or certain retail schemes may need to maintain particular records.
The rules can vary depending on the scheme you're using. If you're considering changing VAT schemes, check the record-keeping requirements before making the switch.
Do VAT Records Have to Be Kept Digitally?
For most VAT-registered businesses within Making Tax Digital for VAT, certain VAT records must be kept digitally using compatible software.
HMRC's Making Tax Digital rules cover the digital recording of information such as supplies made and received and the VAT account.
This is one reason cloud accounting software can be useful. Instead of keeping everything in spreadsheets and paper folders, you can upload invoices and receipts directly into your accounting system.
However, digital record keeping does not mean you can throw away every supporting document without checking the rules. You should still keep the original records or appropriate electronic copies that support your transactions.
How Long Do You Need to Keep VAT Records?
For most VAT-registered businesses, VAT records must generally be kept for at least six years.
This can include invoices and other records supporting your VAT accounting. There are some exceptions and special rules. For example, HMRC states that businesses using the VAT One Stop Shop (OSS) or certain historic MOSS arrangements may have a 10-year record-keeping period.
So, don't automatically delete your records after six years if you're using a special scheme.
What About Digital Receipts?
Digital receipts are perfectly useful for keeping your records organised. For example, you might receive an email receipt for:
Software
Online advertising
Subscriptions
Business travel
Office supplies
Save the receipt electronically and attach it to the relevant transaction in your accounting software where possible. This makes it much easier to find the evidence if you need it later.
What Happens If You Lose a VAT Invoice?
This can be a problem, particularly if you want to reclaim VAT.
HMRC says you cannot reclaim more VAT than is shown on a valid VAT invoice.
If a supplier has sent you an incorrect invoice, ask them to correct it and issue a new invoice. Don't simply change the figures yourself.
A simple rule:
If you cannot support the VAT claim, don't assume you can reclaim it.
A Simple VAT Filing System for Small Businesses
You don't need a complicated system. A simple structure could be:
Sales
Keep:
Sales invoices
Credit notes
Customer refunds
Relevant correspondence
Purchases
Keep:
Supplier invoices
Receipts
Credit notes
Expense records
Banking
Keep:
Bank statements
Payment records
Cash records, where applicable
VAT
Keep:
VAT Returns
VAT calculations
VAT account
VAT payment confirmations
Error corrections
International
Keep:
Import documents
Export documents
Customs paperwork
Relevant overseas transaction records
The important thing is that your records are organised enough for you or your accountant to follow what happened.
Common VAT Record-Keeping Mistakes
Here are some problems we regularly see businesses run into:
Keeping only bank statements
A bank statement proves that money was paid, but it doesn't necessarily provide all the information needed to support a VAT claim.
Deleting cancelled invoices
Cancelled invoices still form part of your records and should not simply disappear.
Losing purchase invoices
This can make it difficult to support VAT reclaimed on expenses.
Mixing personal and business transactions
This makes bookkeeping and VAT checking much harder.
Leaving bookkeeping until the VAT deadline
Trying to reconstruct three months of transactions at the last minute is a recipe for mistakes.
Assuming accounting software does everything automatically
Software can make VAT bookkeeping much easier, but it is only as good as the information entered into it.
How to Make VAT Record Keeping Easier
A few simple habits can make a big difference.
Keep records as you go. Don't wait until your VAT Return is due.
Upload receipts immediately. If your software allows it, attach the receipt to the transaction.
Keep business and personal spending separate. This makes reconciliation much easier.
Review your VAT codes. Make sure transactions are being treated correctly.
Reconcile your bank regularly. This can help identify missing or duplicated transactions.
Keep your VAT records for the required period. Don't delete them simply because the VAT Return has already been submitted.
Ask for help when something looks unusual. International transactions, property, partial exemption and special VAT schemes can require additional consideration.
What Records Should a VAT-Registered Sole Trader Keep?
If you're a VAT-registered sole trader, you generally need the same core VAT records as other VAT-registered businesses. For example:
Sales invoices
Purchase invoices
Receipts
Bank statements
VAT account
VAT Returns
Credit and debit notes
Relevant business records
Being a sole trader doesn't mean you can take a more relaxed approach to VAT records. In fact, keeping good records can make your accounts much easier to manage.
What About Landlords?
VAT and property can be particularly complicated. A landlord may have different VAT considerations depending on the type of property and activity involved.
For example, residential rents are generally exempt from VAT, while commercial property transactions can have different VAT implications. If VAT applies to your property business, keep all relevant:
Rental invoices
Supplier invoices
Property-related expenses
VAT invoices
Contracts and agreements
VAT calculations
If you're unsure whether your property income is subject to VAT, get advice before simply adding VAT to your invoices.
Frequently Asked Questions
Do I need to keep paper VAT invoices?
Not necessarily. VAT records can often be kept electronically, provided the records meet HMRC's requirements. Businesses within Making Tax Digital for VAT generally need to maintain certain VAT records digitally.
How many years of VAT records do I need to keep?
For most businesses, the general rule is at least six years. Some special schemes have different requirements.
Do I need to keep receipts as well as invoices?
Keep the supporting records for your transactions. Where you're reclaiming VAT, make sure you have the appropriate VAT evidence. A bank statement alone is not necessarily enough to support an input VAT claim.
Can I reclaim VAT if I've lost the invoice?
You should not assume you can. HMRC requires appropriate evidence for VAT recovery, and you cannot reclaim more VAT than is shown on a valid VAT invoice.
Does accounting software count as VAT record keeping?
Compatible accounting software can form an important part of your VAT record-keeping system, particularly under Making Tax Digital for VAT. However, you still need to retain the supporting records required by HMRC.
Final Thoughts: Good VAT Records Make Life Easier
VAT record keeping doesn't have to be complicated. The basic idea is simple:
Keep evidence of what you sold, what you bought, the VAT involved and how you arrived at the figures on your VAT Return.
If you keep your records regularly, rather than trying to find everything when the VAT deadline arrives, you'll have a much better chance of spotting mistakes early and avoiding unnecessary stress.
At DUO Accountants, we believe bookkeeping and VAT should be understandable. Not something that leaves you scratching your head over spreadsheets. Whether you're a sole trader, small business owner or landlord dealing with VAT in the UK, keeping good records is one of the simplest ways to stay organised and confident about your numbers. And if you're not sure whether your current VAT records are good enough, it's better to ask the question now than wait until HMRC asks for them.
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