How long should I keep VAT records?

Keeping accurate VAT records is not just good practice, it is a legal requirement for all VAT-registered businesses in the UK. These records form the basis of your VAT returns and may be needed if HMRC reviews your accounts. This article explains how long you must keep VAT records, what documents count as VAT records, and how to store them in line with Making Tax Digital requirements.

Every VAT-registered business in the UK must keep detailed records of its sales, purchases, and VAT transactions. These records help you prepare accurate VAT returns and provide evidence if HMRC requests verification. Failing to maintain proper records can result in penalties or the disallowance of VAT reclaims.

The legal time frame for keeping VAT records

HMRC requires businesses to keep VAT records for at least six years. This period applies from the end of the last VAT period covered by the record.

For example, if your VAT year ends in December 2024, you must keep those records until at least December 2030.

In some cases, HMRC may require records to be kept for longer, particularly if your business is involved in complex transactions such as land or property deals, or if you have signed long-term contracts.

It is advisable to retain key VAT documents beyond the minimum period if they are linked to assets or agreements that still affect your business finances.

What counts as VAT records

VAT records include all the information HMRC needs to check your returns. You must keep:

  • Copies of all sales invoices and receipts.

  • Purchase invoices, bills, and supplier credit notes.

  • VAT account summaries showing how VAT due and reclaimable was calculated.

  • Import and export documentation.

  • Details of adjustments, corrections, or bad debt relief claims.

  • Records of zero-rated, exempt, or reverse charge transactions.

  • Bank statements showing relevant payments.

You must also keep a VAT account, sometimes called a “VAT summary,” which acts as a running total of your input and output VAT for each period.

If your business issues simplified invoices or uses an accounting system that generates digital VAT reports, those records must also be stored securely and remain accessible.

Digital record keeping under Making Tax Digital

Since the introduction of Making Tax Digital (MTD), most VAT-registered businesses must keep digital VAT records and submit returns using compatible software. This means:

  • You must record all VAT transactions electronically.

  • Paper records alone are no longer sufficient.

  • Data must be stored in a system that can link to HMRC through digital reporting.

Examples of compliant software include Xero, QuickBooks, FreeAgent, and Sage. These systems automatically store your VAT data securely, which makes it easier to retrieve records if HMRC conducts an inspection.

Even if you use software, you are still legally responsible for ensuring records are complete and accurate.

Storage formats accepted by HMRC

HMRC allows VAT records to be stored in several formats:

  • Digital copies: Scanned or photographed invoices and receipts stored electronically.

  • Cloud storage: Files saved through your accounting software or secure cloud services.

  • Paper records: Traditional hard copies, provided they are legible and accessible.

The key requirement is that records must be easy to retrieve and readable by HMRC officers if requested. You should avoid storing important documents in formats that could become obsolete or corrupted.

If you switch to a new accounting system, make sure old records are transferred safely or remain accessible in the previous format.

Records for property and long-term assets

If your business buys, sells, or rents property, the retention period for VAT records can exceed six years. This is because property transactions often involve VAT adjustments over several years through the capital goods scheme or option to tax elections.

In these cases, it is best practice to retain related records for at least ten years, or for the entire duration of any lease or option period, whichever is longer.

This ensures you can substantiate any VAT claims or adjustments if HMRC reviews your records in future.

Records relating to imports and exports

If you trade internationally, your VAT records must include import VAT statements, customs declarations, and proof of export. These documents should also be kept for at least six years.

Proof of export is particularly important for goods sold at zero rate. Without it, HMRC could reclassify the sale and charge VAT retrospectively.

What happens if you lose VAT records

If your VAT records are lost, stolen, or destroyed, you must notify HMRC as soon as possible. HMRC may ask for supporting evidence such as duplicate invoices, bank statements, or information from suppliers and customers.

You should make every effort to reconstruct lost records and keep a note explaining the reason for their loss and what action was taken to replace them.

Using digital backups and cloud-based accounting systems can prevent this problem by ensuring records are duplicated automatically.

Penalties for poor record keeping

HMRC can charge penalties if your VAT records are missing, incomplete, or inaccurate. These penalties vary depending on the severity of the issue and whether it affects the accuracy of your VAT return.

Even if no VAT is underpaid, HMRC may still fine your business for failing to keep proper records, especially if you are repeatedly non-compliant.

In some cases, HMRC may disallow VAT reclaims if you cannot provide documentary evidence to support them.

Practical tips for managing VAT records

  • Review your VAT records after each return period to ensure they are complete.

  • Back up digital records in more than one location.

  • Label files clearly by VAT period or financial year.

  • Keep supplier details updated to make invoice verification easier.

  • Store property-related VAT documents separately from routine records.

Consistency in filing and archiving will save time during audits and reduce the risk of losing important data.

Example

A retail business files quarterly VAT returns. Its VAT quarter ended on 31 March 2024, so the business must retain all records for that period until at least 31 March 2030.

If the business purchased a property in 2024 and opted to tax it for VAT purposes, those records should be kept for at least ten years, until 2034.

When to seek advice

If you are unsure how long to retain records for specific transactions, such as property developments or overseas trading, consult your accountant. They can help you interpret HMRC guidance and ensure compliance with sector-specific rules.

An accountant can also advise on setting up a secure and compliant record-keeping system under Making Tax Digital.

Conclusion

You must keep VAT records for at least six years, and longer in some cases involving property or long-term contracts. Records may be stored digitally or on paper, but they must be accurate, complete, and easily accessible.

By maintaining organised and secure VAT records, you protect your business from penalties, simplify audits, and ensure compliance with HMRC’s regulations.