Most people know that to recover VAT a business needs to be in receipt of a valid VAT invoice. Without a proper VAT invoice, it is simply impossible to recover VAT. But what is a valid VAT invoice, when does a business need to provide one and when can you ask for one?
Strangely enough, under UK VAT rules a business is only required to provide a VAT invoice for supplies made to another VAT registered business. In other words, there is no need for a business to issue VAT invoices to consumers and private individuals. Therefore, for many B2C supplies no formal VAT invoices are issued.
In practice, if a customer asks for a VAT invoice it is unlikely that the supplier will request and check the customer’s VAT number, which means that most suppliers will issue invoices as a matter of course if requested. Crucially in the UK, there is no need to put the customer’s VAT number on the face of the invoice.
Readers will be familiar with retailers’ VAT invoices or till receipts which can be issued by retailers for sales of under £250 and show the supplier’s name, address and VAT registration number, date, a brief description and the VAT rate applicable.
The UK tax authorities (HMRC) will generally accept by informal concession that VAT on invoices addressed to an employee rather than the business they work for is recoverable by the company. This is becoming increasingly popular for employees working from home who purchase items to enable them to work from home. It also applies to business trips such as hotel bills, taxi receipts etc. which are addressed to an individual rather than the company they work for.
Sometimes invoices do not show the required information. HMRC will allow a business to recover VAT where an invoice is missing:
- unique identifying number
- customer’s name and address
- tax point date – customer can use the date of issue
However, if the invoice is missing more than the above information, the customer should request that the supplier provides a proper VAT invoice. If the supplier fails to provide a proper VAT invoice, the customer can try and find alternative evidence to support any input VAT claimed. However, it is important to note that alternative evidence is at HMRC’s discretion.