Are you struggling to understand the rules on VAT invoices? Don’t get penalized! Read the blog post to learn what information you must include in invoices you issue, how to reclaim the VAT from purchases and more about VAT invoices.
UK VAT Invoices Explained
For any UK VAT-registered business, knowing what information to include on issuing a VAT invoice is essential, as failure to provide the correct details could result in penalties or fines.
Fortunately, the UK VAT system is relatively straightforward and user-friendly. However, it is still important to take the time to learn the requirements thoroughly and ensure that your invoices are compliant.
This blog will focus on VAT invoices explained to make it easier to understand. After reading, you should have a comprehensive guide to VAT invoices, how to issue them correctly, and other aspects you need to know about.
VAT Invoices Explained: Full VAT Invoice
When you are not sure of what type of invoice to use, you can never go wrong with the full VAT invoice since this is the most common one. Full VAT invoice will need to include:
- A unique invoice identification number
- Supplier’s name and address
- Supplier’s VAT registration number
- The name and address of the customer
- A description of the goods or services sold (with quantity sold for each)
- The time and date of issuance
- The time and date the supply was made (can be the same as the date of issuance)
- Price per item (excluding VAT)
- The total amount charged (excluding VAT)
- The total amount of VAT (with the VAT rate per item – must be explicitly disclosed if zero-rated or exempt)
Simplified VAT Invoice
A simplified VAT invoice is ONLY allowed for transactions involving values less than £250 (including VAT). Simplified invoices are less detailed than full invoices, and they must include the following information:
- A unique invoice identification number
- Supplier’s name and address
- Supplier’s VAT registration number
- A description of the goods or services sold (with quantity sold for each)
- The VAT rate per item – must be explicitly disclosed if zero-rated or exempt
- The total amount charged, including any VAT
Modified VAT Invoice
The modified VAT Invoice is essentially the same as the full invoice, but in addition of:
- Price per item (VAT-inclusive)
- The total amount payable (including VAT)
These two items are not required in the full VAT invoice but are added to the modified VAT invoice if agreed upon with the client.
For a better picture of the differences between the information needed for these three VAT invoices, we created a summary table:
| Information Needed | Full Invoice | Simplified Invoice | Modified Invoice |
| A unique invoice identification number | / | / | / |
| Supplier’s name and address | / | / | / |
| Supplier’s VAT registration number | / | / | / |
| The name and address of the customer | / | X | / |
| A description of the goods or services sold (with quantity sold for each) | / | / | / |
| The time and date of issuance | / | X | / |
| The time and date the supply was made (can be the same as the date of issuance) | / | X | / |
| Price per item (excluding VAT) | / | X | / |
| The total amount charged (excluding VAT) | / | X | / |
| The total amount of VAT | / | X | / |
| The VAT rate per item – must be explicitly disclosed if zero-rated or exempt | / | / | / |
| Price per item (VAT-inclusive) | X | X | / |
| The total amount payable (including VAT) | X | / | / |
VAT Reclaim
To reclaim the VAT paid on goods and services you purchase for your business, you must provide a valid VAT invoice that meets the requirements outlined by HMRC, as discussed above, but this time, you are the customer.
If you receive an invalid invoice, you should request a new one from the supplier. Beware of the following documents that can be mistakenly identified as valid invoices for reclaiming VAT:
Pro-forma invoice
A pro-forma invoice is a preliminary invoice sent to a customer before the goods or services are delivered. It provides details about the goods or services offered, the price, and any terms and conditions, but it does not constitute a legal VAT invoice.
Statement of transactions
A statement is a summary of all the transactions that have taken place between you and your customer over a period of time. Yes, it helps keep track of your sales and payments, but it also is not considered a VAT invoice.
Delivery Note
A delivery note, on the other hand, is a document that serves as an attachment to the shipment of goods and provides details about the contents of the shipment. While it is important for recording deliveries and managing your inventory, it is also not a valid VAT invoice.
Frequently Asked Questions
Can I issue a VAT invoice after the goods or services have been delivered?
Yes, you can issue a VAT invoice up to 14 days after the goods or services have been delivered.
So if you forgot to issue a VAT invoice at the time of the transaction, or if the customer requested an invoice after the fact, you still have time to send a valid invoice that complies with HMRC requirements.
Should I be required to issue a VAT invoice for sales not subject to VAT?
No, you are not required. Instead, you can issue a regular commercial invoice that includes all the relevant information about the transaction.
But bear in mind that even if you are not charging VAT on the sale, you still need to maintain complete transaction records for tax and accounting purposes.
Do I need to maintain a copy of every VAT invoice I issue?
Yes, you should keep a copy of every VAT invoice you issue for at least six years. This is important for record-keeping purposes and in case of any future audits or inquiries by HMRC.
Conclusion
Issuing a VAT invoice is an essential part of running a VAT-registered business. It not only helps you stay compliant with tax regulations, but it also enables you to reclaim any VAT that you are entitled to.
If you need professional advice about VAT invoicing or other tax-related matters, do not hesitate to seek advice from Sterlinx Global.
