How to Write an Invoice Without VAT?
Any business owner that operates an enterprise in the UK needs to know about the rules surrounding invoicing and Value Added Tax (VAT). Even if your business is not VAT-registered, you will usually need to issue invoices for your customers. To avoid any unpleasant penalties come tax time, it makes sense to have a good understanding of how to write an invoice and what is required from you by Her Majesty's Revenue and Customs (HMRC). For businesses that are VAT-registered, there may still be times when you need to write a non-VAT invoice.
Do you need to register for VAT?
Not every business that operates in the UK has to register for VAT. If your business earns less in an accounting year than the VAT threshold of £85,000, you do not have to register for VAT. If you earn £85,000 or more, however, then your business has to register for VAT payments with HMRC. This applies whether you are a company, a partnership or self-employed. VAT returns need to be done on a quarterly basis. In some cases, you may be able to defer VAT payments.
Requirements of a non-VAT invoice
Businesses that are not registered for VAT must still issue invoices that contain relevant information about the business itself, the goods or services provided to the customer and the customer themselves.
If your business is not registered for VAT, you need to be sure that your invoices are not labelled as ‘VAT invoices’ or ‘tax invoices’ If you use a template to write invoices, make sure that these phrases are not included.
HMRC stipulates that an invoice without VAT must still include the following details:
- The name, address and contact information of the company supplying the goods or services
- An identifying invoice number that is unique and sequential
- The name or the company name and address of the customer who is being invoiced
- A detailed description of all goods and/or services that have been provided to the customer
- The date on which the goods or services were provided. Also known as the ‘supply date’
- The date on which the invoice was issued
- The amount charged for each product or service provided. Amounts should be listed per unit and include the quantity and amount
- A total net amount payable
A non-VAT invoice does not need to detail applicable VAT amounts and should not show a VAT registration number. While many business owners keep digital records of their VAT invoices, this is not required for invoices without VAT. Input VAT cannot be claimed from an invoice without VAT.
When you can issue an invoice without VAT
Non-VAT-registered businesses do not ever have to issue invoices that have VAT amounts on them. A VAT-registered business does, although this is not always the case. VAT invoices are usually issued for sales to other VAT-registered businesses. There is no requirement for a business to issue a VAT invoice to regular private customers, however, the business must supply such an invoice if the customer requests it.
Instances when a business that is registered for VAT does not need to issue an invoice with VAT amounts listed, include:
- Invoices for private customers
- When goods or services are supplied as a gift
- Goods supplied under a VAT second-hand margin scheme
- Goods that are VAT exempt or have a zero VAT rate
- Goods or services for customers that have a self-billing arrangement or use authenticated receipts
If you are unsure whether or not an invoice needs to have VAT amounts listed, check with an accountant or contact HMRC for advice.
What if you forget to add VAT details on an invoice?
Everybody can make a mistake, especially when it comes to paperwork. If you have mistakenly issued an invoice without VAT details, or you have included VAT details on a non-VAT invoice, all you need to do is issue a credit note. This cancels out the invoice, which you can then reissue with the correct details.
If you are having trouble staying on top of your invoicing, take a look at the services offered by Mooncard today. We can help you to simplify and streamline all your accounting processes and keep on top of your paperwork. Get in touch to book a no-obligation, free demonstration from Mooncard.