If you run a business in which you are registered for VAT, then it is imperative that whenever you supply goods or services to someone else who is registered for VAT as well, then you must issue them a VAT invoice. For those that are properly registered you will be able to reclaim VAT on purchases made for your business when you have a valid VAT invoice for the purchase.
HMRC defines a VAT invoice as a formal document, either paper or electronic, which shows certain VAT details of the sale or supply of goods and services. You will not be able to reclaim the VAT on purchases by using the following documents, as these do NOT count as true invoices: a pro-forma invoice, invoices that state “this is not a tax invoice”, statements, delivery notes, orders, letters, emails or other correspondence.
Here is a list of information that your invoice will need to feature:
1. An invoice number that is unique and follows on from the number of your last invoice (if you void or cancel a serially numbered invoice, you will need to hold on to it for your next VAT inspection)
2. The seller’s name and/or trading name and registered address.
3. The seller’s VAT registration number. VAT Registration
4. The invoice date.
5. The tax point (time of supply), if different from the invoice date.
6. A description of the item(s) sold. For each item, also include the unit price (not including the VAT), the quantity of goods/extent of services, the rate of VAT for the items being sold, the total amount payable (excluding VAT), the amount of any cash discount, and the total amount of VAT charged.
Invoices issued for zero-rated or exempt goods/services will need to clearly show that there is not VAT payable. For sales that equal £250 or less (including VAT) you are able to issue a simplified invoice. It needs to show the seller’s name, VAT registration number, time of supply (tax point) and a description of the goods/services. Also include the total price (including VAT) and the VAT rate applicable to the item for each item of supply if they feature different VAT rates.
A less detailed invoice can be issued for sales made on credit cards. Be sure to adapt the sales voucher you give to the cardholder to show the information listed above. Keep copies of all less detailed invoices that you issue.
There are certain times when you will not need to issue a VAT invoice. These include:
1. If you are NOT registered for VAT.
2. If you and your customer use a self-billing arrangement or if you are issuing authenticated receipts.
3. If you have made a gift of goods on which VAT is due.
4. If you are selling second-hand goods using the VAT margin scheme. Refer instead to applicable rules for said scheme.
5. If you are selling goods using the Tour Operators margin scheme.
6. If you have issued a pro-forma invoice.
For international trading, you can issue the invoice in foreign currency and even in a foreign language, if you so wish. However, you must also show the total VAT payable in pounds sterling, if the sale was made in the UK. Have an English translation of the invoice available to present to the visiting VAT officer, if requested.