When is a VAT invoice not a VAT invoice?
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Although many suppliers are likely to be VAT registered, not all are. However, even those who are VAT registered might not be providing you with a proper VAT invoice or receipt.
A valid VAT invoice is crucial if you want to reclaim the VAT on purchases (assuming you’re VAT registered). A proper VAT invoice should include:
👉The date and time of supply,
👉The supplier’s name and address, and
👉The suppliers’ VAT registration number.
It will also include the purchases (or services) being bought and the price (excluding VAT or including) and the VAT element of the purchase.
Occasionally, you may see what looks like an invoice or till receipt which says ‘This is not a VAT invoice’. This means either:
👉The sale hasn’t taken place yet (i.e., it’s pro forma invoice), or
👉It’s a till receipt that omits the VAT breakdown.
Pro forma invoices
A pro forma invoice is a quote sent to buyers in advance of the delivery of goods or services. It may even be an estimate if you’re buying goods that fluctuate in price, such as wood.
👉It’s important to understand that a pro forma is not a demand for payment – nor is it a valid VAT invoice. Only when the price has been agreed and you, the customer, pay a deposit (or pay in full), will the supplier issue a proper VAT invoice or receipt.
Receipts that omit a VAT breakdown
It’s common for supermarkets such as Tesco not to give VAT receipts unless asked. (You might be familiar with these if your accountant is asking you for your VAT receipts and you’re adamant you’ve already sent them or uploaded them to your accounting software😉.) And some high street shops don’t give you a receipt at all!
On the other hand, shops such as Costco give VAT receipts as standard as most of their customers are businesses.
Detailing the bill for VAT purposes takes a bit of effort for a purchasing system and most customers are not businesses asking for a VAT breakdown – hence why Costco provides VAT invoices and Tesco doesn’t.
Practical point
Strictly speaking, VAT should not be reclaimed if a paid invoice or till receipt says ‘This is not a VAT invoice’ on it. However, if you have the VAT registration number (look at the top, bottom or back of the receipt), and you know for certain the item you are buying includes standard rate VAT, then we’re told HMRC rarely bother about it.
👉For a list of goods that have VAT charged on them, visit https://www.gov.uk/guidance/rates-of-vat-on-different-goods-and-services.
📢❕The information in this blog post was correct at the time of writing. Please check with your accountant for the latest information or, if you don’t have an accountant, join the Financial Resilience Hub to get access to one of ours! Alternatively, keep an eye on HMRC’s website for updates.
See also
From our blog:
👉VAT records – what do you need to keep?
From the HMRC:
👉VAT invoices — detailed rules
👉Charge, reclaim and record VAT
ABOUT THE AUTHOR
Helen Monaghan is a Chartered Management Accountant, accredited NLP Practitioner & Finance Coach. Both a psychology graduate and an accountancy graduate, she has authored three business books, which beautifully bring together psychology, finance, and tax to empower the reader about money. Helen is the CEO of HM Finance Coaching & Advisory Ltd, a company that provides financial education and business mindset coaching to small businesses across the UK, in addition to accountancy services for limited companies in Scotland and across the UK. Helen is also the founder of The Financial Resilience Hub – find out how we can support you, and your business, to be financially resilient through our monthly membership.
© Helen Monaghan
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