What records to keep?

For any business it is vital to keep evidence to support all transactions for tax purposes. Records will needed by the bookkeeper, business owner to refer back to and also HMRC. However for VAT purposes HMRC are not always looking for a full VAT invoice.

Small purchases

Purchases under £250 require a less detailed invoice such as fuel receipts and some cash expenses such as parking and pay phones require no paperwork at all as long as there is an expenses claim or record of the payment to reclaim the VAT.

Larger purchases

On purchases over £250 HMRC have the discretion to allow a claim for input VAT where you do not have a full VAT invoice but have other evidence to prove you made a purchase on which VAT was payable. SP 7/2003 explains that a business can reclaim VAT without having a VAT invoice from other suitable evidence such as:

  • payment records
  • transport invoices
  • insurance
  • purchase order
  • delivery note
  • record of the sale of the purchased item

Although alternative paperwork may not be sufficient on it’s own and additional evidence may be sought during an investigation such as banking records. If HMRC refuses the claim and you think it has been unreasonable you can appeal against the decision.

Not in the business name

Purchase invoices and other supporting evidence need not always be in the name of the business. When someone buys something on behalf of the business the business can still reclaim the VAT as long as the business reimburses the individual.

In a perfect world

Although it is comforting to know that when some of those invoices go missing, you lose you parking ticket or you accidentally put the invoice in your own name you can still get the VAT back it is always best to try to remember to keep all paperwork, put it in the business name and pay for it with the business funds.