2. VAT invoices

Only VAT-registered businesses can issue VAT invoices and you must:

  • issue and keep valid invoices (these can be paper or electronic)
  • keep copies of all the invoices you issue even if you cancel them or produce one by mistake

You can’t reclaim VAT using an invalid invoice, pro-forma invoice, statement or delivery note.

Valid invoices

You’ll use a full VAT invoice for most transactions. You can use:

  • a modified invoice for retail supplies over £250
  • a simplified invoice for retails supplies under £250 - and for other supplies from 1 January 2013

Include the following on your invoice, depending on which type you use.

Invoice information Full invoice Simplified invoice Modified invoice
Unique invoice number that follows on from the last invoice Yes Yes Yes
Your business name and address Yes Yes Yes
Your VAT number Yes Yes Yes
Date Yes No Yes
The tax point (or ‘time of supply’) if this is different from the invoice date Yes Yes Yes
Customer’s name or trading name, and address Yes No Yes
Description of the goods or services Yes Yes Yes
Total amount excluding VAT Yes No Yes
Total amount of VAT Yes No Yes
Price per item, excluding VAT Yes No Yes
Quantity of each type of item Yes No Yes
Rate of any discount per item Yes No Yes
Rate of VAT charged per item - if an item is exempt or zero-rated make clear no VAT on these items Yes Yes (1) Yes
Total amount including VAT No Yes (1) Yes

(1) If items are charged at different VAT rates, then show this for each.

Exceptions

There are different invoice rules if you use a VAT Margin Scheme or trade internationally.

If you use the Cash Accounting Scheme you have to stamp an invoice with the amount of cash paid and the date.

Deadlines

Usually VAT invoices must be sent within 30 days of the date of supply or the date of payment (if you’re paid in advance).

Foreign currencies

You don’t have to show all amounts on your invoices in sterling. But if there’s any VAT due you must show this in sterling.

To convert to sterling you can:

  • use the market selling rate at the time of supply
  • use the European Central Bank’s rate - from 1 January 2013
  • use HMRC’s period rates of exchange - the rates usually stay the same for each calendar month
  • apply to HMRC to use a different method to account for the VAT

There are different rules if you use the Tour Operator’s Scheme.

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