All VAT-registered businesses must:
- keep records of sales and purchases;
- keep a separate summary of VAT;
- issue correct VAT invoices
In the UK, VAT records must be kept for at least six years (or ten years if the trader uses the HMRC VAT mini-one-stop-shop (VAT MOSS) service).
VAT records may be kept on paper, electronically or as part of a software program (e.g. book-keeping software) - but whichever method is used, the records must be accurate, complete and readable.
HMRC can visit businesses to inspect record-keeping and impose penalties if the records are not in order.