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What needs to be included on a VAT invoice? – An Easy Guide for Business Owners

Dec 6, 2022 | Business, European VAT, Tax & Accounting, VAT Payment

All You Need to Know About VAT Invoice

Indeed, you want the flow of your business procedures to continue smoothly in harmony. Therefore, it is important to keep all the official records related to financial management. This blog provides all the necessary details associated with the VAT invoice. 

For this purpose, the types of VAT Invoices (and what they must contain) are explained. Moreover, additional information has been provided for your assistance that might make it easier for you to comprehend the subject. 

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As a type of financial transaction associated with legal and business procedures, the VAT includes charging clients and paying the Her Majesty’s Revenue and Customs (HMRC).

Unquestionably, the process involves keeping records and producing invoices. A VAT-registered business must present the VAT invoice to the clients when needed.

Types of VAT Invoice

The VAT invoice may be produced in three possible forms concerning the UK VAT laws and regulatory frameworks. This classification into the types is based on the total amount summed up as a result of sales generation. 

The point of the division lies in the amount of £250. The types are known as simplified, modified, and full VAT Invoices. 

Simplified VAT Invoice

This type can be produced when the generated sales amount up to the value of £250. As the name suggests, this includes the simplest form of details that a company may provide to clients. Here is a list of details that are required to be added to this specific list.  

  • The supplier information: name and address. 
  • The VAT registration number of the supplier. This number is the value that a business may acquire from the HM Revenue and customs when registering for VAT. 
  • The information on goods and services that are sold. It includes their description, the date of supply, and the VAT rates charged on them. 
  • Total payable amount including VAT. 
  • The invoice Identification number
Vat Invoice
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Modified VAT invoice

The provision of the Modified VAT Invoice is associated with sales that amount to values greater than £250. This type of VAT Invoice is more elaborate and includes further details than the ones provided while issuing the Simplified VAT Invoice. Following is a list of the additional information that is included in the Modified VAT Invoice 

  • The date of invoice.
  • The details of the client (name and address.)
  • The prices of items minus the VAT amount.
  • The total price of all the items minus the VAT amount
  • A total of only the VAT amount.
  • Rate of the discount issued on every item. 
  • Prices of all the unit items. 

Full VAT Invoice

This type of VAT Invoice is not bound to be issued at a specific sales amount. Contrarily, it can be issued regardless of considering the amount generated. Therefore, the Full VAT Invoice is a good solution when there exists doubt. 

This type of Invoice includes all the details that are included in the Modified VAT Invoice except the total amount payable, including VAT.  

VAT Reclaim and Invalid Invoices

It is to be remembered that the Valid VAT Invoice is one that follows the regulatory framework produced by the UK government. If a VAT invoice fails to provide the necessary information, then it is treated as invalid. 

In such a situation, the invoice holders cannot reclaim the VAT amount since the HMRC may not recognise the document. 

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The VAT Invoice – Not to Be Confused With…

The VAT Invoice must not be confused with other legal documents that are drafted to assist the supply chain process. 

Pro-form invoice 

A Pro-form invoice or proforma invoice is the type of invoice that the supplier issues as a request for advance payment. This type of Invoice should not be confused with the VAT invoice. 

A Pro-form invoice has no legal value in accounting procedures. Moreover, the responsible stakeholders must add a statement in the invoice clarifying it as ‘not a VAT Invoice.’

Delivery Note

Like the proforma, the delivery note cannot be used for accounting purposes. This document provides a list of the total items that are delivered. 

VAT Statement 

It is to be noted that the VAT statement is another useful document related to the VAT application on goods and services. However, this document is a legal document issued to the tax administrative authorities containing information related to the payable VAT amount associated with a specific time period. 

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Frequently Asked Questions

  • What is a VAT Reclaim?

    A VAT Reclaim is an amount that the VAT registered businesses may reclaim from the authorities that they had paid for the items as VAT. If you need help related to VAT reclamation, then we might provide you with the best assistance.

  • What can be done if the Invoice is Invalid?

    The responsible stakeholder must provide evidence to satisfy the HMRC. This evidence must contain important details related to the supply process, including VAT details, location (must be the UK), item details, and VAT registration status of supplier and recipient. 

    You may enjoy all kinds of VAT-related assistance through the solutions we provide at Sterlinx.

  • Can I use a third party to issue invoices?

    If you wish, you may ‘outsource’ the physical responsibility for issuing your sales invoices to a third party. But it is pertinent to remember that all the legal obligations relating to the contents, storage and production of the invoices raised remain with you.

    You may enjoy all kinds of VAT-related assistance through the solutions we provide at Sterlinx.

Summing Up

The VAT invoice is an important document that holds fiscal value. According to the UK VAT rules, the VAT Invoice can be structured with respect to three types.

The types are classified according to their consideration of the total sales amount. The invoice must be valid to be considered by the tax administration departments.

Moreover, there exist other documents such as proformas, delivery notes, and VAT statements that are also a document associated with supply chain management.

However, they must not be confused with the VAT Invoice. We hope that this article was useful for you. You are important to us, and we value your business. 

If you require expert accounting services with guaranteed quality, then we may prove beneficial. We at Sterlinx, are accounting and VAT specialists for eCommerce Businesses. We provide you with the opportunity to focus on important business affairs while we manage your accounting procedures. 

Hire Us for Accounting?

Why not save time and hire us to do your books in the UK or globally?

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