For how long must VAT-registered traders keep their records?

VAT-registered traders are required to keep their records for a minimum of 6 years. This duration is mandated to ensure that businesses have the necessary documentation to support their VAT returns in case of an audit or inquiry from HM Revenue and Customs (HMRC). The 6-year period allows sufficient time for the authorities to review past transactions, verify compliance, and assess any potential discrepancies that may arise during that timeline.

Keeping records for 6 years is aligned with general financial accounting principles, which require documentation to be retained for a reasonable period to ensure that all financial activities can be verified. This duration helps in maintaining transparency and accountability in business operations, particularly in tax matters.

The other options suggest shorter or unnecessarily longer retention periods, which do not align with VAT regulations. Generally, shorter periods, such as 3 years or only until the end of the tax year, would not provide enough support for potential enquiries or audits. In contrast, a retention period of up to 10 years is excessive for VAT purposes, as it goes beyond the requirements established by the tax authority. Therefore, the minimum of 6 years stands as the standard requirement for VAT record retention among registered businesses.