What a VAT invoice has to show, and when a simpler one will do

What is a VAT invoice?

An ordinary invoice with a fixed set of extra facts on it, sent by a VAT-registered business. Those facts are what let your customer reclaim the VAT you charged them, so a VAT-registered customer needs every one of them on the page.

HMRC's guide, VAT Notice 700, says when you need one. If you are VAT registered and you supply standard-rated or reduced-rated work to another VAT-registered business, you must give them a VAT invoice, normally within 30 days of the tax point (the date the VAT is treated as due; more on that below).

You do not need one for zero-rated work, or for a customer who is not VAT registered. HMRC's own advice is practical, though: you usually cannot tell who is registered, so issue a VAT invoice to any customer who asks for one.

What does a VAT invoice have to show?

Eleven things, in HMRC's own list. Most are on every invoice already. The ones a VAT invoice adds are your VAT number, the tax point, the VAT rate, and the VAT total in pounds.

Two of those trip people up. Unit price sounds like shop stock, but HMRC says that for services the countable part might be an hourly rate or a price for a standard job. If the work cannot be broken into units, the whole price excluding VAT is the unit price.

And the currency rule bites on one line only. Everything else can be in euros or dollars if that is what the job was priced in, but the total VAT must be in sterling.

A VAT invoice is an ordinary invoice with four more facts on it: your VAT number, the tax point, the rate and the VAT in pounds.

Lines with no VAT on them

If one invoice mixes VAT-able work with something zero-rated or exempt, HMRC asks you to show clearly that those items carry no VAT, and to give them a separate total. It also says you can simply put them on an invoice of their own.

What is the tax point, and which date goes on the invoice?

The tax point is the date the VAT counts from. For a trade it is usually the day you finish the work, unless you invoice within 14 days of finishing, in which case it becomes the invoice date.

HMRC calls the first one the basic tax point: for services, the date the work is performed, normally taken as the date everything except the invoicing is done. Then there is the 14 day rule. Issue the VAT invoice up to 14 days after that, and the date you issue it becomes the tax point.

That is why most trade invoices show one date and are right to. Finish on Tuesday, invoice on Thursday, and the invoice date is the tax point. HMRC's list only asks for a separate date of issue where the two differ.

What does a VAT invoice look like, with the numbers in?

A fictional plumber services a boiler and fits a pump for a VAT-registered letting agent, and invoices two days after finishing. The work comes to £408.00 before VAT, and the invoice asks for £489.60.

Above the lines sit the plumber's name, address and VAT number, the agent's name and address, the invoice number and the date. Because it went out within 14 days of the job, the invoice date is the tax point and one date does both jobs.

The labour line is the unit price at work: three hours at £55.00 is the countable part HMRC means. And the total is over £250, so this one has to be a full VAT invoice. A simplified one would not do.

When can I use a simplified VAT invoice?

When the supply is £250 or less including VAT, and your customer agrees. It drops the customer's details and the line-by-line figures, but still has to show your VAT number and the rate.

HMRC's list for a simplified invoice is short:

For a call-out or a small repair it saves nothing worth having if your app writes the full version anyway. Where it earns its keep is a paper receipt book. Either way, a customer who asks for a full VAT invoice should get one.

How do I make a VAT invoice in Invoice Koi?

Choose the United Kingdom when you set up, add your VAT number, and every invoice carries VAT at 20% with the word VAT on it. It covers HMRC's list for work at one rate, with three gaps worth knowing about.

Setting the country to the United Kingdom is what prefills pounds, a 20% rate and the word VAT. Then put your VAT number in "Registration or licence number" in your business details, and it prints at the foot of every invoice. The number is sequential and assigned for you, each line prints its quantity, unit price and net amount, and the totals print the subtotal, the VAT at its rate and the total.

The three gaps

The rate prints once. HMRC's list asks for the VAT rate against each description. Invoice Koi prints it once, on the VAT line ("VAT 20%"), and marks any line you switched "Charge VAT" off with "no VAT". It does not print a rate column. Whether that is enough for a particular customer is a question for whoever does your books.

One rate per invoice. The rate comes from your business details, so a job with lines at two rates, 20% and 5% say, cannot go on one Invoice Koi invoice.

No separate total for lines without VAT. Those lines print "no VAT", but they do not get the total of their own that HMRC asks for. Put them on an invoice of their own, which HMRC allows.

The tax point is the invoice date in the usual case above. If it is another day, write it in "Note on the invoice", which prints below the totals.

Written up by trade, with the lines each one bills: plumbers, electricians and builders.

Asked about VAT invoices