VAT invoice requirements – don’t let your claims get rejected!
Are you registered for VAT? If so, it might be a good time to review the format of your VAT invoices. VAT invoice requirements are highly specific. If you don’t put the right information on VAT invoices, it can scupper your attempts to claim for VAT input tax.
This is a lesson learned by one firm. According to Accountingweb.co.uk, HMRC disallowed a claim for £14,667. The reason? The invoice didn’t include ‘a description sufficient to identify the goods or services supplied’.
Issuing VAT invoices
It may be obvious, but only VAT registered businesses can issue VAT invoices. If you are thinking of registering for VAT, you can find more information here. Remember, if your VAT taxable turnover is over £90,000 you must register for VAT. If you have any queries about what constitutes VAT taxable turnover, please speak to your THP account manager.
When you issue VAT invoices, you must:
- Issue either paper or electronic invoices – and keep copies
- Keep copies of invoices you cancel or produce in error
- Keep all invoices for items you buy.
So far, so good. But are there VAT invoice requirements you need to follow?
Current VAT invoice requirements
Depending on the transaction, you can issue one of three types of VAT invoice: a full invoice, a simplified invoice or a modified invoice.
A full VAT invoice is the most detailed and is what you’ll issue in most situations. However, you can issue a simplified invoice for supplies under £250 (including VAT). If your customer agrees, you can issue a modified invoice with VAT inclusive values rather than VAT exclusive amounts. These are for supplies over £250.
So what information needs to go on the three different types of VAT invoice? You can read chapter and verse in the Value Added Tax Regulations 1995 (available here). HMRC also publishes a much simpler table, which we’ve reproduced below.
VAT invoice checklist
| Invoice information | Full invoice | Simplified invoice | Modified invoice |
| Unique invoice number that follows on from the last invoice | Y | Y | Y |
| Your business name and address | Y | Y | Y |
| Your VAT number | Y | Y | Y |
| Date | Y | N | Y |
| The tax point (or ‘time of supply’) if this is different from the invoice date | Y | Y | Y |
| Customer’s name or trading name, and address | Y | N | Y |
| Description of the goods or services | Y | Y | Y |
| Total amount excluding VAT | Y | N | Y |
| Total amount of VAT | Y | N | Y |
| Price per item, excluding VAT | Y | N | Y |
| Quantity of each type of item | Y | N | Y |
| Rate of any discount per item | Y | N | Y |
| Rate of VAT charged per item – if an item is exempt or zero-rated make clear no VAT on these items | Y | Y * | Y |
| Total amount including VAT | N | Y * | Y |
Note that, for items marked an asterisk (*), you need to show the different VAT rates you have charged (if this is applicable).
Worth bearing in mind…
HMRC not only stresses that you can’t reclaim VAT with an invalid invoice, but also that you can’t reclaim it with a pro-forma invoice, statement or delivery note. Also, if you use the Cash Accounting Scheme, you must stamp invoices with the date and the amount of cash paid. There are also different record keeping rules for the VAT Margin Scheme.
Give your VAT invoices a health check
Given the strict rules about what must be included on VAT invoices, it’s easy to make an expensive mistake. If you’re a THP client and you’d like us to double check your VAT invoices are valid, we’d be very happy to advise you. Also, if you’re looking for an accountant to take care of your VAT returns, drop us a line – it’s a service we provide for hundreds of satisfied clients.
About Kirsty Demeza
With a portfolio that ranges from startups to companies with a £10 million turnover, Kirsty’s talent for working closely with her clients ensures her services remain in strong demand.
“The most rewarding part of my role is seeing clients succeed,” she says. “When you help a new business and watch it expand into new premises and secure big contracts, it’s a great feeling.” Kirsty never finds two days are the same.
As well as providing accounting services that range from self-assessment tax planning and VAT to audit and accounts, she’s part of THP’s sales team and closely involved in helping our trainees to develop their skills.
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