VAT Records You Must Keep

Key facts

You must keep VAT records for at least 6 years.
Under MTD, records must be kept digitally using compatible software.
Records must include all sales and purchases, VAT charged and reclaimed.
HMRC can charge penalties for inadequate record-keeping.

VAT Records Every Business Must Keep

As a VAT-registered business, you must keep records of:^[1]

All sales and purchases (the “VAT account”)
A summary of VAT for each tax period
All VAT invoices issued and received
All credit and debit notes
Import and export records
Records of items bought or sold where no VAT invoice is required
Records of goods given away or used for personal purposes

The VAT Account

Your VAT account is a summary that shows, for each return period:^[3]

Output VAT charged on sales
Output VAT due on acquisitions
Input VAT on purchases
Any corrections or adjustments
The net VAT payable or reclaimable

How Long Must You Keep Records?

You must keep VAT records for at least 6 years. If you use the Margin Scheme, you may need to keep records longer.^[1]

Digital Record-Keeping Under MTD

Under Making Tax Digital, you must:^[2]

Keep digital records of all transactions using MTD-compatible software
Maintain digital links between your records and your VAT Return submission
Store your business name, address, and VAT registration number digitally
Record the time of supply, value (net of VAT), and rate of VAT for every transaction

Digital links: You can use spreadsheets as part of your record-keeping, but the data must flow digitally into your filing software without manual re-keying. Copy-and-paste counts as a digital link; re-typing figures does not.

Penalties for Poor Record-Keeping

If HMRC finds your records are inadequate during an inspection, they can:

Issue a penalty (up to £3,000 for each instance of deliberate non-compliance)
Estimate your VAT liability based on available information
Refuse input VAT claims where supporting invoices are missing

Frequently Asked Questions

How long must I keep VAT records?

You must keep VAT records for at least 6 years. This includes all sales and purchase invoices, credit notes, import and export records, and your VAT account summary.

Do I need to keep digital VAT records under MTD?

Yes. Under Making Tax Digital, you must keep digital records of all transactions using MTD-compatible software, with digital links between your records and your VAT Return submission.

What is a VAT account?

A VAT account is a summary showing output VAT charged on sales, input VAT on purchases, any corrections or adjustments, and the net VAT payable or reclaimable for each VAT return period.

What are the penalties for poor VAT record-keeping?

HMRC can issue penalties of up to £3,000 for each instance of deliberate non-compliance, estimate your VAT liability, or refuse input VAT claims where supporting invoices are missing.

Sources

Record keeping (VAT Notice 700/21) — GOV.UK
Making Tax Digital for VAT — GOV.UK
VAT record keeping — GOV.UK