VAT – Staying compliant

10th September 2016

Keeping VAT records

You must keep VAT records for at least six years. You can keep them on paper, electronically or in so ware. Records must be accurate, complete and easy to access.

If you’ve lost a VAT invoice you can’t rely on a photocopy. Ask the supplier for a duplicate (marked ‘duplicate’).

You must keep a separate record of the VAT you charge and the VAT you pay on your purchases. This record is called a ‘VAT account’. There aren’t any rules on what
a VAT account should look like, but it must show:

  • Your total VATsales
  • Your total VAT purchases
  • The VAT you owe HMRC
  • The VAT you can reclaim from HMRC
  • If your business uses the VAT Flat Rate Scheme the at rate percentage and turnover it applies to
  • The VAT on any EU acquisitions (purchases) or dispatches (sales).
  • The VAT you owe or are entitled to following a correction or error adjustment

VAT invoices

The following 13 elements must be included on an invoice for it to comply with VAT regulations:

  • Unique invoice number that follows on from the last invoice
  • Your business name and address
  • YourVATnumber
  • Date
  • The tax point (or ‘time of supply’) if this is different from the invoice date
  • Customer’s name or trading name, and address
  • Description of the goods or services
  • Total amount excluding VAT
  • Total amount of VAT
  • Price per item,excludingVAT
  • Quantity of each type of item
  • Rate of any discount per item
  • Rate of VAT charged per item-if an item is exempt or zero-rated make clear no VAT on these items.
  • Show the total of these values separately

    For more information visit

VAT visits

VAT o cers can visit your business to inspect your VAT records and make sure you’re paying or reclaiming the correct amount of VAT.

HMRC may not need to visit you. They may contact you to request a copy of your accounts, sending data backup from Sage Accounts so ware is su cient for this. You’ll usually be given seven days’ notice if they do decide to make a visit and they’ll con rm what information they’ll want to see and if they want to inspect your premises.

Before a VAT visit you should make sure that all your VAT records are in order.

How o en you get a visit depends on:

• Howbigorcomplexyourbusinessis

• WhetheryourVATReturnshavebeenlateorincorrect.

A er the visit, HMRC will write to you con rming:

• What you must do to improve your VAT record keeping
• Any corrections you must make to your VAT account
• If you’re overpaying or underpaying your VAT.

You can appeal a HMRC decision but you must do it within 30 days.

Sage on VAT

We know that VAT can be a pain point for many small businesses and one that can cause much confusion and sometimes keep you awake at night, but it doesn’t have to.

At Sage we’re here to help take some of that pain away, whether that’s worrying about whether you need to be VAT registered or wondering how it all works we’re here to support you through it.

All of our accounts so ware is designed to help you manage, process and submit VAT quickly and easily, giving you more time to focus on your business.

New Customers: 0800 44 77 77

Existing Sage Customers: 0800 33 66 33

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