This guide will help you to set up basic VAT records and lay out your VAT invoices correctly. It also tells you where you can go to get more information and advice.

Basic VAT paperwork: what do I have to do?

As soon as your business is registered for VAT you must:

• raise a VAT invoice whenever you make a standard-rated or reduced-rated supply to a VAT-registered customer
• keep copies of all invoices and receipts you send or receive
• keep a note of all the VAT you have paid and charged
• keep a summary of VAT for each tax period covered by your VAT returns

You don't have to keep records in any set way, but they must be complete and up to date. They must also be easy for HM Revenue & Customs to inspect and the figures that you have used to fill in your VAT return must be easy to find. Usually your normal business records can be adapted quite easily to give this information. See our guide on how to set up a basic record-keeping system. Records must be kept for a minimum of six years.

VAT invoices must be set out correctly, showing the rate and amount of VAT charged and the VAT number given to your business when you registered. You must also make sure that invoices from your VAT-registered suppliers show the same information so you can reclaim the VAT you pay.

What a VAT invoice should include

Whenever you supply goods or services on which VAT is chargeable to another VAT-registered person or business, you must give them a document showing certain information about what you are supplying. This document is called a VAT invoice.

Normally you must issue a VAT invoice within 30 days of the date you make the supply.

What details must I include on a VAT invoice?

You must show:

• an identifying number
• your name, address and VAT registration number
• the date of issue of the invoice
• time of supply (tax point) - if different from date of issue of the invoice
• your customer's name (or trading name) and address
• a description identifying the goods or services supplied
• the unit price
• the rate of any cash discount offered
• the total amount of VAT charged, shown in sterling
• the gross total amount payable, excluding VAT

For each description of goods and services you must show the following:

• quantity of goods or extent of the services
• rate of VAT
• amount payable, excluding VAT

See our example of a completed VAT invoice.

Read guidance on VAT record keeping and accounts at the HM Revenue & Customs website.

Keeping a VAT account

A VAT account is a summary of the totals of your VAT on sales, known as output tax and VAT on purchases, known as input tax. The information it contains will help you to complete your VAT return at the end of each tax period.

There is no set way to keep your accounts. You should add up the VAT in your records and transfer the totals to your VAT account under separate headings for input and output tax. At the end of each accounting period you should subtract your input tax from your output tax and record the difference.

If the combined net value of errors you find on previous VAT returns is:

• £2,000 or less - you can adjust your VAT account and include the value of that adjustment in your current VAT return.
• More than £2,000 - you must inform you local VAT Business Centre in writing. You can find their address in your local phone book. You can't make this adjustment on your VAT return.

In both cases you usually cannot correct errors made in an accounting period which ended more than three years ago. Find out about correcting VAT errors on the HM Revenue & Customs website.

You can read guidance on VAT record keeping and accounts on the HM Revenue & Customs website.

Keeping records for different VAT schemes

Everyone has to keep similar records for VAT, but there may be important differences depending on the nature of your business and whether you use one of the special accounting schemes.

Read guidance on VAT record keeping and accounts on the HM Revenue & Customs website.