B1: 2.04 Invoices

An invoice is a demand for payment prepared by businesses and given to their customers. They include information about both the supplier and customer involved in the sale/purchase as well as details about the goods or services supplied and the amounts charged.

The precise information to be included on an invoice depends to some extent on the nature of the supplier (i.e. is it a company or a sole trader or a partnership), whether the business is registered for VAT and the type and value of goods or services being supplied.

In general however, a VAT registered business would include the following on their invoices:

  • The name, address and other contact details of the business
  • The business’ VAT registration number
  • The invoice date, that is, the date the invoice was issued
    • Note that another date known as a “tax point” might also be shown on the invoice. A tax point is the date used for VAT purposes and in most cases this will be the same as the normal invoice date. This is not a course on VAT and anyone wanting further information on tax points might try chapter 14 of the VAT Notice 700 (i.e. the VAT Main Guide) which is available on HM Revenue & Customs’ website
  • A unique sequential invoice number (the invoice might also include the customer’s purchase order reference for the goods and the business’ delivery note number)
  • It should be made clear that this document is an invoice – this is generally done by including the word “Invoice” in a prominent position
  • The customer’s name, address and, if the business has one, the reference used for the customer
  • Details of the different types and quantities of goods or services being billed together with the net amounts charged
  • Details of the VAT rate used and the amount of VAT charged
  • Details of the gross total charged (i.e. the total of the net and VAT amounts)
  • Many businesses will also include information about the credit terms the goods/services have been supplied under and the terms of conditions of supply (which are often included on the reverse side of the invoice)
Example of an Invoice

If the total value (i.e. gross value) of the invoice is for £250 or less, a simplified invoice can usually be issued. A simplified invoice would not record the customer’s name and address and would not have to show the net or VAT amounts.

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