VATREC5010 - VAT invoice: Details which must be shown on a full VAT invoice

The requirements of a VAT invoice were amended by the Value Added Tax (Amendment)(No5) Regulations 2007, effective from 1 October 2007. This amendment made some changes to the details required on a VAT invoice.

To facilitate business in adapting to the changes HMRC agreed to a 12 months transitional period. Regulatory penalties under s.69 of the Value Added Tax Act 1994 should only be assessed in respect of that period in cases of abusive and repeated or fraudulent non-compliance. Any regulatory penalty will apply to the general failure and will not attach to each invoice issued.

A full VAT invoice is a document that complies with all the requirements of VAT Regulations 1995, regulation 14(1) (as amended by SI 2085/2007), containing the following particulars:

  • A unique sequential number: This number should be based on a series of numbers that you use to identify your invoices.
  • The time of supply: This is the time when the goods or services were supplied.
  • The date of issue: This is the date when the invoice was issued.
  • Your name, address, and VAT registration number: This information should be the same as the information on your VAT registration certificate.
  • The name and address of the customer: This is the person who is buying the goods or services.
  • A description of the goods or services: This description should be clear and specific enough to identifty the goods or services being supplied.
  • The quantity of the goods or the extent of the services: This information should be included for each item on the invoice.
  • The rate of VAT and the amount payable, excluding VAT: This information should be included for each item on the invoice.
  • The gross total amount payable, excluding VAT: This is the total amount of the invoice, before VAT is added.
  • The rate of any cash discount offered: If you are offering a cash discount, you must state the rate of the discount.
  • The total amount of VAT chargeable: This is the total amount of VAT that is due on the invoice, expressed in sterling.
  • The unit price: This is the price of each individual item on the invoice.
  • Margin Scheme: If you are using a margin scheme, you must include a relevant reference or indication on the invoice.
  • Reverse Charge: If the invoice relates to a supply where the customer is liable to pay the tax, you must include a relevant reference or indication on the invoice.

Requirement to include a sequential number

Previously, the wording of regulation 14(1)(a) stated only that the invoice required ‘an identifying number’. Now, 14(1)(a) requires "a sequential number based on one or more series which uniquely identifies the document."

Consultation with businesses prior to the change of wording confirmed that the new wording has no effect on the way that the majority of businesses number their invoices, as they already issue invoices from a sequential series.

The change has resulted in questions from business and their advisors, and a summary of the more common questions and answers is provided below:

Does the invoice number series have to be numerical, or can it include letters?

The ‘invoice number’ can be numerical, or it can be a combination of numbers and letters, as long as it forms part of a unique and sequential series.

In order to avoid the appearance of having only just started in business I do not want to start at Invoice no.1 and would prefer to commence with, say, Invoice no 1135. Is this allowed?

Yes, as long as the invoice series runs consecutively from that point.

I currently use a unique customer reference number as the identifying number on the invoice. If I add an additional consecutive number will this be acceptable?

Yes, this would have the affect of creating a unique and sequential series.

I have several customers and I wish to run several separate sequences of invoices at the same time. Is this possible?

Yes, it is acceptable to operate more than one sequence at the same time.

My business operates as several separate business units or divisions. Is it possible for each unit or division to operate its own sequence of invoices?

Yes, it is acceptable to operate more than one sequence at the same time.

I operate a service centre, centrally issuing invoices from one series covering several corporate group companies situated in several EC member States. This means that there will be apparent breaks in invoicing sequence for each company, but I can show that the invoices are issued in sequence, albeit allocated to different entities. Is this acceptable?

Yes, this satisfies the requirement for invoices to be issued sequentially from one or more series.

What if there is a break in sequence, for example where I cancel an invoice or it is spoiled and never issued to a customer?

As long as you retain the cancelled or spoiled invoice in your accounting records, or you can provide an explanation for the break in sequence, this is acceptable.

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 a ‘reverse charge’ supply

For the purposes of regulation 14(1)(o), 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 subject to the ‘reverse charge’.

The way in which the 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:

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