Pro-forma invoices: Risks associated with pro-forma invoices
There are a number of risks associated with pro-forma invoices, the most common of which have been listed below:
- Customer uses the pro-forma invoices to support input tax deduction.
- Customer claims input tax twice (against both the pro-forma invoice and the VAT invoice).
- Supplier fails to issue a VAT invoice when a supply has been made (i.e. relies only on the pro-forma invoice).
- Supplier uses incorrect tax point (for example issue of VAT invoice rather than receipt of payment).
This list is not exhaustive and you should view with caution any instance of a pro-forma invoice appearing in a trader’s accounting records.