What Do You Need to Include on a VAT Invoice?

What exactly is a VAT invoice?

Any UK-based business with an annual turnover of more than £85,000 must register for VAT via HMRC. Whenever a VAT-registered business sells taxable goods or services it must issue a VAT invoice. 

If the customer is another VAT-registered business, a full VAT invoice will be required. Without that invoice, the business – or the self-employed person - buying the goods or services will not be able to claim back the VAT amount from HMRC on their tax return. In the case of a retail private customer, a modified or simplified VAT invoice can suffice. 

A VAT invoice is considered to be a legal document. All VAT invoices must be submitted to HMRC via a VAT report at the end of every accounting period. It should be noted that during the period between 20^th March and 30^th June 2020, the UK government operated a VAT deferral scheme. This scheme is no longer running. If you wish to defer VAT payments, contact the HMRC for advice. 

What has to be on a VAT invoice?

A VAT invoice must contain specific information for it to be valid. A VAT invoice can be issued on paper or in digital format. 

There are three different types of VAT invoices: a full VAT invoice, a modified VAT invoice and a simplified VAT invoice. 

Full VAT invoices

A full VAT invoice must include:

• The name of the supplier, their address and their VAT registration number
• The customer’s name and address 
• An identification number unique to the invoice
• The date the invoice was issued
• The time the goods or services were supplied
• Descriptions and quantities of all supplied goods or services
• The total amount due without VAT
• The total amount of VAT due
• The individual price of each item, without VAT
• What rate of VAT was charged per item (Items must also be shown to be VAT exempt or zero-rated)
• Any discounts that have been applied to items

Full invoices are issued to other VAT-registered businesses, whether they are companies, partnerships or self-employed individuals. 

Modified VAT invoices

Anytime a business sells retail goods with a value of more than £250, they can issue a modified VAT invoice. Modified VAT invoices must include all the same information that a full VAT does as well as a total amount due that includes all VAT amounts.

Simplified VAT invoices

Lastly there are simplified VAT invoices. Simplified VAT invoices are issued whenever there is a retail purchase of less than £250. A simplified VAT invoice has to show:

• The name of the supplier, their address and their VAT registration number
• An identification number unique to the invoice
• The time the goods or services were supplied
• Descriptions and quantities of all supplied goods or services
• What rate of VAT was charged per item (Items must also be shown to be VAT exempt or zero-rated)
• The total amount due inclusive of VAT

All VAT invoices must be issued within 30 days of supply. 

Do I always need to complete a VAT invoice?

There is no legal obligation for a business to issue a VAT invoice to a customer that is not registered for VAT themselves. Retailers usually assume that no VAT invoice is needed unless a customer directly requests one be issued. Upon request, a simplified or modified VAT invoice can be issued.

Other instances in which business does not need to issue a VAT invoice:

• The customer has a self-billing arrangement or authenticated receipts are issued
• The goods are a gift
• Goods are supplied under a VAT second-hand margin scheme
• The invoice is for exempt or zero-rated goods only 

Conclusion

Keeping track of your VAT expenses can be time consuming. With Mooncard, you can simplify and streamline your VAT accounting procedures. Our systems can help you stay on top of your paperwork and ensure that all transactions are logged and recorded. Find out how Mooncard can help you by checking out a no-obligation, free demonstration today.