4. Create your sales records
You are required to keep copies of all of the VAT invoices that your business issues that shows:
your VAT registration number
VAT rate that is charged
Tax point (date that VAT is counted as charged)
Self-billing agreements – where your sales invoice is prepared by the customer (their purchase invoice) for you:
VAT number, name and address of self-billing suppliers
copies of all of your self-billing agreements – review on an annual basis
5. Keep records of all purchasing activities
You are required to keep copies of all of your purchase invoices and receipts that have been issued to your business and show:
your original VAT invoices or any evidence that is similar of VAT that has been paid on your purchases
any export documents that relate to overseas trade
credit notes as well as any other documents that change a supply’s value.
HMRC accepts electronic copies of your documents as valid evidence if they contain the following information:
Your business name is printed on the invoice: VAT can only be recovered on invoices that have been specifically issued to your business (of if you are a sole trader the VAT registered entity)
The VAT registration number of the supplier
The VAT rate that was charged
The VAT value charged (search for exempt or zero rated elements in the invoice – you can’t just assume that the entire invoice is vatable supply)
– its tax point (date that VAT is counted as charged)
Receipts won’t usually have your business name on them or separately show the VAT. If the VAT number of the supplier is on the receipt then you will be able to calculate the VAT that has been included on the total receipt value.
At the time this was written, the VAT rate is currently 20%’ this make the VAT fraction £X / 6 (Which should not be confused with £X / 5) since that is inclusive of VAT.
For instance, if there is a £12 receipt value, then £12 / 6 = £2 VAT (£10 + £2 VAT)