HMRC can check a VAT return up to four years after it is submitted, longer if there was carelessness. By then the person who prepared it may have left, and the accounting software may have changed. A VAT return evidence pack is a short folder saved when the return is filed, showing how each box was arrived at.
The pack, box by box
| Box | What to keep |
|---|---|
| 1 Output VAT | VAT report by code; sales day book; list of manual adjustments; reverse charge and postponed VAT entries |
| 2 EU acquisitions (Northern Ireland goods only) | supporting invoices, if applicable |
| 3 Total | arithmetic only |
| 4 Input VAT | VAT report by code; list of large or unusual reclaims with invoice copies; import VAT certificates (C79) or postponed VAT statements; partial exemption calculation if relevant |
| 5 Net VAT | agreement to the VAT control account balance |
| 6 Sales | reconciliation of box 6 to turnover in the ledger, explaining differences (exempt and outside-scope items, reverse charge) |
| 7 Purchases | the same for purchases |
| 8 and 9 | Northern Ireland movements of goods, if any |
Reconciliations that matter most
- VAT control account: the box 5 figure should equal the movement on the VAT liability account for the period. A difference means a posting outside the return or a backdated entry.
- Turnover to box 6: management accounts turnover, adjusted for non-taxable income, should agree to box 6 within a small, explained difference.
- Prior-period changes: list any transactions dated in already-submitted periods. Software often picks them up silently in the next return.
Judgements and adjustments
Keep a one-page note for anything that required judgement:
- error corrections included in the return and whether they were within the correction threshold;
- partial exemption or capital goods scheme adjustments;
- bad debt relief claims and repayments;
- fuel scale charges or apportionments for private use;
- the VAT treatment of unusual or high-value transactions.
Digital links and submission
Making Tax Digital requires the figures to flow between programs by digital links. Save the submission receipt and, if spreadsheets are used between the ledger and the bridging software, a copy of the spreadsheet version used.
How long and where
VAT records must be kept for at least six years. Store the pack in the same place each period (for example a “VAT returns” folder by quarter in the document store) with a fixed naming convention so it can be found without the preparer.
A quick final review
Before submitting, compare the return with the same period last year and the previous quarter; large swings in box 1 or box 4 should have an explanation in the pack.
For correcting errors found later, see correcting VAT return errors; for the ledger side, VAT control accounts.