(a)an identifying number,
(b)the time of the supply,
(c)the date of the issue of the document,
(d)the name, address and registration number of the supplier,
(e)the name and address of the person to whom the goods or services are supplied,
(f)the type of supply by reference to the following categories—
(i)a supply by sale,
(ii)a supply on hire purchase or any similar transaction,
(iii)a supply by loan,
(iv)a supply by way of exchange,
(v)a supply on hire, lease or rental,
(vi)a supply of goods made from the customer’s materials,
(vii)a supply by sale on commission,
(viii)a supply on sale or return or similar terms, or
(ix)any other type of supply which the Commissioners may at any time by notice specify,
(g)a description sufficient to identify the goods or services supplied,
(h)for each description, the quantity of the goods or the extent of the services, and the rate of VAT and the amount payable, excluding VAT, expressed in sterling,
(i)the gross total amount payable, excluding VAT, expressed in sterling,
(j)the rate of any cash discount offered,
(k)each rate of VAT chargeable and the amount of VAT chargeable, expressed in sterling, at each such rate, and
(l)the total amount of VAT chargeable, expressed in sterling.
There are exemptions for Retail Businesses but I am not dealing with them in this post.
I see many invoices that do not include all of these despite the fact that Regulation 13 of The Value Added Tax Regulations 1995 state that in order to make a claim for Input Tax the claimant must hold a valid VAT invoice that complies with the above requirement. It is possible for VAT Inpectors to dissalow claims where the claiment does not hold the required documentation.
Lets look at some real life scenarios that I have seen and the potential risks.
1) I have come across more than one new client in my time that was not keeping any VAT Invoices at all. Both only gave their bank statements to their old accountants and both claimed that their old accountants had never told them that they need to hold a valid VAT Invoice to make a claim. Both clients were very concerned when it was explained to them that if they were subjected to an enquiry from HMRC all of their Input Tax could be dissalowed leaving them with a massive bill.
2) There are many cases where businesses pay VAT to businesses that are not actualley VAT Registered. In one case a public house operator claimed back £40k of VAT he had paid to a builder to refurbish his new pub. The claim was handled by his accountant rather than the companies book keeper given the size of the claim. Unfortunatley HMRC challenged the claim and found that the builder was not VAT Registered and dissalowed the claim, the builder was by this point long gone. The VAT Invoice did have a VAT number shown but the number was actualley the company registration number. The accountant had ignored the warning signs that included the supplier being a start up company, the supplier being newly incorporated and had failed to check the VAT number. ( I will show you how to check a GB VAT Number in a later post). If the invoices had been checked properly the accountants could have stoped his client paying the VAT to the builder instead the clientlost £40k.
3) In a Tribunal Case I advised on HMRC were dissalowing a claim for £680k of Input Tax claimed by clothing wholesaler. Their contention was that the client did not hold a valid VAT Invoices that complied with points g & h above (I have highlited them in yellow). The invoices descriptions such as "50 Jackets for £100" HMRC argued that invoices needed to include sizes, colours, designers and that by not doing so the Invoices were not Valid and they were entitled to dissalow the claim.
In summary it is important to remind all your job preparers of the need to make sure your client holds a valid VAT Invoice for every claim and to watch out for Invoices that may not comply completely with the rules.
