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HMRC internal manual

VAT Traders’ Records Manual

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HM Revenue & Customs
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VAT invoice: unit price

The requirement to show unit price on a VAT invoice only applies to a supply involving countable goods and services. For goods, unit price calculation is straightforward and should present no difficulty for traders to show on their invoices. With services, the unit price could be several things and can depend on what is usual in the industry, what detail the supplier wishes to show and what detail is required by the customer.

For example, the unit price of window cleaning services could be based on one of the following criteria:

  • the overall price of the service; or
  • the price per window, or
  • the hourly rate of the window cleaner.

If it is not practical to break down the supply into countable elements, the whole of the tax exclusive price will be the unit price.

Reference to the fact that the invoice is a second-hand margin scheme invoice

Regulation 14(1)(n) includes the requirement for invoices under the special arrangements for second-hand goods, antiques, works of art and collectors’ items to include a reference to the nature of the treatment. This means the invoice should include a reference to either the relevant EC or UK legislation, or include any other indication of the treatment.

Examples of acceptable wording under the ‘any other indication’ option might include:

  • This is a second-hand margin scheme supply
  • This invoice is for a second-hand margin scheme supply

Reference to the fact that the invoice is for a supply that is subject to the Tour Operators’ Margin Scheme (TOMS)

Regulation 14(1)(n) includes the requirement for invoices under the Tour Operators’ Margin Scheme to include a reference to the nature of the treatment. This means the invoice should include a reference to either the relevant EC or UK legislation, or include any other indication of the treatment.

Although the regulation of TOMS referencing is new from 1 October 2007, it only affects business to business transactions, and businesses are to be given a wide range of choice in deciding the best way of referencing TOMS treatment. This means that HMRC will allow affected businesses the widest possible discretion in adapting commercial and industry norms to meet the ‘any other indication’ requirement.

Examples of acceptable wording under the ‘any other indication’ option might include:

  • This is a Tour Operators’ Margin Scheme supply
  • This supply falls under the Value Added Tax (Tour Operators) Order 1987

Reference to the fact that the invoice is for an intra-EC Exempt or ‘reverse charge’ supply

For the purposes of regulation 14(2)(h), an exempt supply is a supply that, if made in the UK, would be exempt under Schedule 9 of the Value Added Tax Act 1994.

Where an invoice is required it will need to include a reference to the nature of the treatment. This means the invoice should include a reference to either the relevant EC or UK legislation, or include any other indication that the supply is exempt, or subject to the ‘reverse charge’.

Under the regulations the requirement to issue an invoice for exempt supplies only arises when the supply is:

  • business to business
  • across an EC border, and
  • an invoice is required by the EC member State of receipt

Because custom and practice varies widely, even in EC member States whose legislation ostensibly requires an invoice, our advice to UK businesses is that they should always be guided by their customer about the need for an invoice.

The way in which the intra-EC exempt or reverse charge treatment is referenced on an invoice is a matter for business and not HMRC. Our aim is to allow affected businesses the widest possible discretion

Examples of acceptable wording under the ‘any other indication’ option might include:

Exempt supplies

  • Exempt supply
  • Exempt supply for VAT purposes
  • This supply is exempt from VAT

Reverse charge supplies

  • Reverse charge supply
  • This supply is subject to the reverse charge
  • Subject to reverse charge in the country of receipt
  • Subject to reverse charge in another member State
  • This is a UK exempt supply which may be chargeable in the country of receipt
  • This is a UK exempt supply which may be chargeable in another member State

Reference to the fact that the invoice is for an intra-EC Zero Rated Supply

For intra-EC zero rated supplies of goods (dispatches) traders will need to include a reference to the nature of the treatment which accords with the Principal VAT Directive. This means the invoice should include a reference to either the relevant EC or UK legislation, or include any other indication that the supply is a zero rated intra-EC supply.

The way in which the zero rate treatment is indicated on an invoice is a matter for business and not for HMRC. Our aim is to allow businesses the widest possible discretion, and it may be that the format and information already used on invoices is sufficient to satisfy the regulation.

Examples of acceptable wording under the ‘any other indication’ option might include:

  • Zero rated intra-EC supply
  • This is an intra-Community supply

Intra-Community supply subject to VAT in the country of acquisition