Information that invoices must contain
All invoices should clearly state that this is what they are with the word 'invoice'.
They should also include the following:
- a unique identification number
- your company name, address and contact information
- the company name and address of the customer you are invoicing
- a clear description of what you are charging for
- the date the goods or service were provided (supply date)
- the date of the invoice
- the amount(s) being charged
- VAT amount if applicable
- the total amount owed
In addition, if you are a limited company, sole trader and/or VAT registered, the law requires you to provide certain information on any invoices you send to your customers.
You can also add additional information to your invoices as you see fit to avoid delays in them being approved for payment.
Limited companies
Limited companies must have the following additional information on their invoices:
- the full company name as it appears on the certificate of incorporation
- any business name used in your business
- the company registration number
- an address where any legal documents can be delivered to you if you are using a business name
Limited companies may include the names of the directors on their invoices. However, if you are going to publish this information on your invoices, you must include the names of all directors.
Sole traders
A sole trader must have the following additional information on their invoices:
- any business name being used if the surname of the sole trader is not being used
- an address where any legal documents can be delivered to you if you are using a business name
VAT details 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
- a description sufficient to identify the supply of goods or services
- the quantity of the goods or services with a unit price - excluding VAT
- the rate of VAT per item
- the total amount of VAT amount owed without VAT added
- the total amount of VAT
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 do not 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's best 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.
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