Jan 11, 2024 | Business, Sole Traders, Tax

Whether you’re on the selling or buying end, it’s crucial to ensure that any VAT invoices you issue or receive adhere to the stringent VAT regulations.

Neglecting this can lead to complications for both you and your customers.

Using a flawed invoice to reclaim VAT can lead to HM Revenue & Customs (HMRC) rejecting your claim. HMRC may also impose penalties and interest on any incorrectly claimed amounts. Similarly, your business must provide invoices that conform to regulations and include the necessary details to support your customers’ VAT claims.

Understanding the Three Types of VAT Invoice

It’s essential to recognize the differences between the three types of VAT invoices and select the appropriate one for your business needs.

  1. Simplified Invoice

Designed for sales under £250, the simplified invoice minimizes required information. It must include:

  • Seller’s name, address, and VAT registration number
  • A unique sequential invoice number
  • The tax-point (usually the date of supply)
  • A description of the goods or services and the applicable VAT rate(s)
  • The total charge including VAT
  1. Full VAT Invoice

The full VAT invoice is more detailed and is the norm for most transactions. It includes everything in the simplified invoice plus:

  • The invoice date (typically the same as the tax point)
  • The customer’s name and address
  • Details showing the amount excluding VAT and the total VAT charged
  • Unit price and quantity of goods, and any discount details
  1. Modified VAT Invoice

Used for retail sales over £250, the modified VAT invoice contains all the information of a full VAT invoice, plus the total charge including VAT, which is usually present on the full VAT invoice anyway.

Adhering to VAT Regulations

  • With three types of VAT invoices available, choosing the correct type and strictly following the guidelines is essential.
  • VAT invoices are unnecessary if the customer isn’t VAT-registered or if all items on the invoice are zero-rated or exempt.
  • VAT invoices should not be issued for goods under the VAT second-hand schemes. Special invoices are required for supplies under specific schemes like the Margin Scheme or the Tour Operators Margin Scheme.
  • Invoices should be issued within 30 days of supply. Keep copies (including electronic ones) of all issued invoices, including spoiled ones.
  • Sequential invoice numbers are required, but you can use multiple series simultaneously.
  • Quotes and pro-forma invoices are not valid for VAT claims.

Assisting with Your VAT Procedures

Ensuring your VAT invoices are correct and that you have valid VAT invoices for any reclaimed VAT is crucial.

As your advisor, we can verify that your invoices comply with VAT regulations and assess the robustness of your VAT procedures.

Contact us for a comprehensive review of your VAT practices.

Get in touch with us

We’ll discuss what’s needed to give you the best possible outcome.

Find us here:

V307, Vox Studios, 1-45 Durham Street, London, SE11 5JH, United Kingdom