Tag Archives: VAT-record-keeping

VAT: Tax representatives and tax agents – what is the difference and why it is important

By   13 August 2025
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VAT Basics

A Non-Established Taxable Person (NETP) may be required to appoint a tax representative or tax agent if they make taxable supplies in the UK. The term NETP is used to describe a person who is liable to be registered for VAT under the VAT ACT 1994 Schedule 1a. A NETP must register for VAT as soon as it makes its first taxable supply in the UK, or when it expects to make taxable supplies here within the next 30 days, that is; there is no turnover limit for a NETP.

A NETP is a business which has no place of belonging in the UK. So, what is the difference between a representative and agent, and does the NETP get a choice?

Tax representative

A representative maintains the NETP’s VAT records, submits VAT returns and accounts for UK VAT on behalf of the NETP and dels with communication with HMRC. A representative is jointly and severally liable for any VAT debts incurred by the NETP.

A NETP may only appoint one person at a time to act on its behalf, although a tax representative may act for more than one NETP.

Tax agent

 An agent carries out a similar role to a representative, however, the important difference is that HMRC cannot hold an agent responsible for any of NETP’s VAT debts. HMRC reserve the right not to deal with any particular agent. In some circumstances, if HMRC deem think it necessary, it will insist that a tax representative is appointed.

As long as HMRC has not directed (see below) a NETP to appoint a tax representative, it can appoint an agent to deal UK VAT affairs. Any arrangement made will be subject to whatever contractual agreement the NETP and agent decide. In some circumstances, if HMRC think it is necessary, it may still insist that a tax representative is appointed.

Distinction

The tax representative and the tax agent both act on behalf of a NETP. However, while the tax agent operates in the name of the NETP, the tax representative operates in its own name. Consequently, a tax representative is personally committed to pay HMRC and must be accredited beforehand. Contracts between representatives/agents need to be clear on this point and fees charged for this work should reflect the difference in responsibilities. Should the NETP fail to pay VAT, penalties and interest due, HMRC will collect these directly from the tax representative, so, in effect, the tax representative represents a monetary insurance for HMRC.

Direction

HMRC can direct some NETPs to appoint a tax representative who must be:

this is via VAT Act 1994, section 48(1).

HMRC may choose to require some form of security from a NETP whether or not there has been any direction regarding the appointment of a representative.

Not appointing a tax representative or agent

If a NETP does not wish to appoint a tax representative or agent, and HMRC has not directed them to appoint a tax representative, it must meet all its obligations under UK VAT law itself. This includes, inter alia:

Post Brexit

For UK businesses making overseas supplies:

Businesses established within the EU are exempted from appointing a tax representative in other Member-States (MS) as international tax assistance is compulsory within the EU (the local tax administration can request assistance from the country of establishment to recover the money directly from the business). Since Brexit, the UK became a third country, so this rule does not apply, and MS have the choice to make the appointment of a tax representative compulsory for UK businesses. Most MS have done so, the notable exception being Germany.

New guidance for registration of a NETP here.

VAT: How long do I have to keep records?

By   26 June 2023
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Time limits for keeping records

Record keeping is a rather dry subject, but it is important not to destroy records which HMRC may later insist on seeing! I have looked at what VAT records a business is required to keep here, but how long must they be kept for?

This is seemingly a straightforward question, but as is usual with VAT there are some ifs and buts.

The basic starting point

The usual answer is that VAT records must be kept for six years. However, there are circumstances where that limit is extended and also times when it may be reduced. Although the basic limit is six years, unless fraud is suspected, HMRC can only go back four years to issue assessments, penalties and interest.

Variations to the six year rule

One Stop Shop (OSS)

If a business is required to use the OSS then its records must be retained for ten years (and they should be able to be sent to HMRC electronically if asked).

Capital Goods Scheme (CGS)

If a business has assets covered by the CGS, eg; certain property, computers, aircraft and ships then adjustments will be required up to a ten year period. Consequently, records will have to be retained for at least ten years in order to demonstrate that the scheme has been applied correctly.

Land and buildings 

In the case of land and buildings you might need to keep documents for 20 years. We advise that records are kept this long in any event as land and buildings tend to be high value and complex from a VAT perspective, However, it is necessary in connection with the option to tax as it is possible to revoke an option after 20 years.

Transfer Of a Going Concern (TOGC)

This is more of a ‘who” rather than a what or a how long. When a business is sold as a going concern, in most circumstances the seller of the business will retain the business records. When this happens, the seller must make available to the buyer any information the buyer needs to comply with his VAT obligations. However, in cases where the buyer takes on the seller’s VAT registration number, the seller must transfer all of the VAT the records to the buyer unless there is an agreement with HMRC for the seller to retain the records. If necessary, HMRC may disclose to the buyer information it holds on the transferred business. HMRC do this to allow the buyer to meet his legal obligations. But HMRC will always consult the seller first, to ensure that it does not disclose confidential information.

How can a business cut the time limits for record keeping?

It is possible to write to HMRC and request a concession to the usual time limits. HMRC generally treat such a request sympathetically, but will not grant a concession automatically. If a concession is granted there is still a minimum allowance period of preservation which is in line with a business’ commercial practice.

Computer produced records

Where records are stored in an electronic form, a business must be able to ensure the records’ integrity, eg; that the data has not changed, and the legibility throughout the required storage period. If the integrity and legibility of the stored electronic records depends on a specific technology, then the original technology or an equivalent that provides backwards compatibility for the whole of the required storage period must also be retained. 

How to keep records

HMRC state that  VAT records may be kept on paper, electronically or as part of a software program (eg; bookkeeping software). All records must be accurate, complete and readable.

Penalties

If a business’ records are inadequate it may have to pay a record-keeping penalty. If at an inspection HMRC find that records have deliberately been destroyed your they will apply a penalty of £3,000 (this may be reduced to £1,500 if only some of the records are destroyed). In addition, there will be questions about why they have been destroyed!

VAT: Electronic invoicing update

By   8 June 2022
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HMRC has updated VAT Notice 700/63 – Electronic Invoicing in respect of “information required on a tax invoice” (para 3.2).

The Notice sets out what a business needs to do if it is sending, receiving and storing VAT invoices in an electronic format.

Electronic invoicing offers many advantages over traditional paper invoices. The rapid electronic transmission of documents in a secure environment may provide for:

  • structured data for auditing
  • improved traceability of orders
  • decreased reliance on paper reducing storage and handling costs
  • rapid access and retrieval
  • improved cash flow
  • security and easier dispute handling

A business does not need to inform, nor seek permission from, HMRC to use electronic invoicing.

We advise that any business periodically reviews its use of any invoicing system to ensure that:

  • invoices contain all of the required information
  • credit notes are properly issued and accounted for
  • the authenticity of the origin, integrity of invoice data, and legibility are all appropriate
  • its customers agree to receive invoices electronically
  • there is an interchange agreement between EDI (electronic data interchange) trading partners which makes provision for the use of procedures which guarantee the authenticity of the origin and integrity of the data
  • appropriate internal controls are in place
    • system controls, eg; a control which prevents a sales order being changed after the invoice has been issued
    • procedural controls, eg; a purchase order must be issued before an invoice is received
    • authorisation controls, eg; a user who has access to maintain supplier master data can not enter invoices from that supplier
  • the electronic invoice message format is acceptable. Examples include:
    • traditional EDI standards such as UN/EDIFACT, EANCOM and ODETTE
    • XML-based standards
    • comma-delimited ASCII, PDF (this list is not exhaustive)
  • the cross-border invoicing rules are adhered to
  • the conditions for electronic storage are met
  • HMRC can access required information
  • invoices meet all the other conditions in the above Notice

If a business cannot meet HMRC’s conditions for transmission and storage of electronic invoicing, it must issue paper invoices.

There are penalties for incorrect invoices or systems.