Guide

Invoicing and payment terms

VAT details to include on invoices

If you are registered for VAT, whether the business is a limited company or a sole trader, you must also put the following information on your invoices:

  • a unique and sequential identifying invoice number
  • the date the invoice is issued
  • your customer's name and address
  • your business' name, address and VAT registration number
  • date of supply to the customer (or tax point)
  • a description sufficient to identify the supply of goods or services
  • the quantity of goods or services, with a unit price excluding VAT, and the rate of VAT per item
  • the total amount payable without VAT added, and the amount of VAT charged

If you are selling to an individual customer or a non-VAT registered company in another European Union (EU) country, you must pay VAT. However, if the customer is a VAT-registered company in another EU country, you don't charge VAT, but you must:

  • obtain and show your customer's VAT number (including the two-letter country prefix) and your own VAT number on your VAT sales invoice
  • send or transport the goods to your customer within three months, or six months if the goods need processing before being sent
  • keep valid commercial evidence that the goods have been removed from the UK within the correct time limit

Your evidence can include a number of different documents - eg the customer's order or your sales invoice. It must clearly identify the:

  • supplier
  • transporter of the goods
  • customer
  • goods and their accurate value
  • mode and route of transport
  • EU destination

If you cannot fulfil these conditions, you will have to pay VAT at the appropriate UK rate.

It is best practice to set up records and invoice correctly for VAT from the time your business starts - you may find it useful to set up a pro forma invoice. A pro forma invoice can be an invoice drawn up by you and sent to the buyer to confirm the details of a contract, or a polite reminder to the buyer that a debt will be due for payment.