Understanding VAT: Paperwork

If your business is VAT registered, accurate paperwork and record-keeping are crucial for staying compliant and avoiding potential penalties. Here’s a guide to the key areas to focus on:

VAT Invoices

You must issue VAT invoices for sales to VAT-registered customers. Each invoice should clearly show:

• Your business name and address
• Your VAT registration number
• Invoice date and unique invoice number
• Customer name and address
• A description of the goods or services
• The VAT rate applied and amount of VAT charged
• The total amount including VAT

Keeping VAT Records

You are legally required to keep records of:

• Sales and purchase invoices
• Receipts
• Import and export documentation
• Any adjustments made to VAT returns (such as correcting errors)

Records must be kept for a minimum of 6 years. HMRC may request to inspect them at any time, so it’s essential they are complete, accurate and accessible.

Digital Records & Making Tax Digital (MTD)

If your business is affected by Making Tax Digital for VAT, you must also keep certain records in a digital format and submit VAT returns through compatible software. This includes maintaining digital links between systems where VAT data is transferred or adjusted.

Common Mistakes to Avoid

• Missing VAT on invoices or applying incorrect rates
• Not keeping digital records where required under MTD
• Failing to keep copies of supplier invoices (you cannot reclaim VAT without valid evidence)
• Incorrectly adjusting VAT without proper records of the correction

Getting your VAT paperwork right is vital — it helps ensure you reclaim the correct VAT and protects you during an HMRC inspection. If you have any questions about VAT paperwork or record-keeping requirements, we’d be happy to assist.

Useful HMRC Guidance:
VAT record keeping
Making Tax Digital for VAT

If you have any queries concerning the above or would like any assistance with these changes then please contact Will Churcher on 023 8046 1218 or email Will Churcher.