VAT invoicing changes

Please be aware that over the last few years there have been various VAT invoicing requirements changes.

Unit price

  • VAT invoices generally must now show the unit price where the invoice applies to countable goods or services. For services this could be an hourly rate or fixed price per service. Where the supply cannot be broken down into countable units, the total VAT exclusive price will be the unit price. Therefore, in the case of services, in order to prevent the need for quoting each individual’s charge-out rate on every invoice, all work could be split into the separate jobs/assignments (each representing a countable item) and a fee stated. Failure to adopt this approach may require the taxpayer to quote the hourly charge-out rate of each member of staff involved in the job/assignment on the invoice.

Where the Customer Accounts for VAT Due

  • For supplies to EU businesses where VAT is payable by the customer (instead of the supplier), both VAT numbers must be shown and the invoice endorsed to indicate the customer’s liability to pay the VAT and/or the relevant legislation and the actual amount of VAT payable.

E-invoicing

  • You are required to notify HM Revenue & Customs (HMRC) within 30 days of beginning to issue electronic invoices.
  • Electronic invoicing systems must be VAT compliant (see Notice 700/63). However, it appears HMRC will allow many formats for the issue of invoices as long as the system is deemed secure, although if invoices are issued to customers in other EU member states you will need to check they can receive your particular format of e-invoice.
  • Should you intend to issue both an e-invoice and a paper invoice on a permanent basis (i.e. not a trial period for a new electronic system) for the same supplies, or to the same trading partners, approval from HMRC is required.

Other invoicing rules have been relaxed as follows:

Currency

The only amount required in sterling on an invoice subject to UK VAT is the VAT amount itself.

Self-billing

Prior approval from HMRC for self-billing is no longer required provided conditions set out in the VAT regulations and VAT notice 700/62 are met.

Simplified retailers’ invoices

The upper limit for simplified retailers’ invoices has been increased to £250 (including VAT).

Zero-rated and Exempt Supplies

When invoicing customers in other EU countries for zero-rated or exempt supplies, you must now issue a full VAT invoice with all the required details even though you are not charging VAT.