Keeping Business Records When You’re VAT Registered

HMRC sets out special rules that you need to follow for keeping business records when you’re VAT registered.

These rules apply whether you are self employed or have a limited company.

It is important to make sure you adhere to these rules because without the correct business records HMRC could charge you penalties in the event of a VAT inspection.

Key Business Records You Should Keep if You’re VAT Registered

Here are the key pieces of business records you need to keep:

  • Bank statements
  • Supplier invoices
  • Cash expense forms & receipts
  • Business credit card statements & receipts
  • Mileage claims
  • Statements detailing your online earnings like eBay Statements, Paypal account and Etsy income
  • A VAT account which records on an ongoing basis VAT you need to pay and VAT you need to reclaim, so you know at any one point in time what your VAT liability is, not just at the end of a VAT quarter
  • VAT Invoices for all sales you make

How Long Should You Keep Business Records for HMRC

You should keep your business records for 6 years.  Fortunately you can now keep your business records digitally. This avoids the need to store paperwork for years at a time.

How to File Your Business Records

Filing your business records is essential but it can be overwhelming.  Especially if you ignore it for a while and it builds up.

The easiest way to keep hold of your business records is to file them all digitally.  

If you are struggling to file your business records then read my post on How to Organise Your Business Records. I share the method I use to making filing my business records a breeze.

Making Tax Digital and VAT

From 1 April 2019 all VAT registered businesses will be required to maintain all their VAT workings digitally using an HMRC approved bookkeeping software. 

This change is what is known as Making Tax Digital (MTD).

If you haven’t heard about MTD then you are not alone.  It is estimated around 40% of small business owners haven’t.  You stand to be affected if you are not using a MTD compliant piece of bookkeeping software, like Freeagent to file you VAT returns.

What Does Making Tax Digital Mean?

Making tax digital does not affect how you keep copies of your business records. That part of business record keeping remains unaffected.

Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of www.goselfemployed.co - a UK small business finance blog where she shares help and advice with the self-employed community to make topics like registering a business, bookkeeping and taxes easy to understand.