If you are VAT registered, you must make sure you have a VAT invoice or receipt for your purchase to be able to claim the VAT back in your VAT return.

For every VAT invoice lost, missing or simply not recovered  – the cost of your purchase increases by 1/6th. This is the VAT on your purchases that you cannot recover because you have not collcted the right evidence.

For example:

 Potential VAT Lost

Total price paid Vat Fraction Amount of VAT lost
£10.00 20% VAT = 1/6 of Gross invoice value £1.66
£12.00 20% VAT = 1/6 of Gross invoice value £2.00
£100.00 20% VAT = 1/6 of Gross invoice value £16.66
£120.00 20% VAT = 1/6 of Gross invoice value £20.00
£1000.00 20% VAT = 1/6 of Gross invoice value £166.66
£1200.00 20% VAT = 1/6 of Gross invoice value £200.00

What IS a VAT invoice?

There are three types of invoice recognised by HMRC:

  • full VAT invoices are used for most transactions
  • simplified invoices  for supplies under £250
  • receipts
Invoice information Full invoice Simplified invoice Receipts
1.  Document name Yes Yes Sometimes
2.  Unique invoice number that follows on from the last invoice Yes Yes No
3.  Supplier’s business name Yes Yes Yes
4.  Supplier’s business  address Yes Yes Sometimes
5.  Supplier VAT number Yes Yes Yes
6.  Date Yes No No
7.  The tax point (or ‘time of supply’) if this is different from the invoice date Yes Yes Yes
8.  Customer’s name or trading name, and address Yes No No
9.  Description of the goods or services Yes Yes Sometimes
10.  Total amount excluding VAT Yes No Sometimes
11.  Total amount of VAT Yes No Sometimes
12. Price per item, excluding VAT Yes No No
13.  Quantity of each type of item Yes No No
14.  Rate of any discount per item Yes No No
15.  Rate of VAT charged per item – if an item is exempt or zero-rated make clear no VAT on these items Yes Yes (1) Yes
16.  Total amount including VAT No Yes (1) Yes

(1) If items are charged at different VAT rates, then show this for each.

Characteristics of a VAT invoice:

  • Your business name: Invoices should be made out to the company claiming the VAT. A Ltd cannot reclaim the VAT on an invoice to B Ltd.

Invoice Example

What is not a VAT invoice

  • Quotes – are estimated prices for goods or services. They are a commitment to a price not a confirmation of sale. They do not confirm actual VAT paid, only the VAT implication of this transaction should you wish to go ahead and place the order – and so you cannot recover VAT on the basis of a quote.
  • Proformas – are like quotes and indicate a price for goods or services and usually include the VAT element. Some buyers insist on a proforma invoice before payment, which suits suppliers who won’t issue tax invoices until goods are shipped or paid for.
  • Orders confirmations or acknowledgements are also not VAT receipts. They may provide sufficient evidence of a business spend, but they don’t provide enough evidence to be able to reclaim the VAT.

Quotes, proforma invoices, and orders do not represent completed transactions or a commitment to pay for goods or services. these happen before the sale takes place and could change.  Always ask the supplier for the VAT receipt or invoice.

Invoices are issued after the sale takes place and confirm the obligation to pay for goods and services. The invoice will confirm the amount due and VAT element of the sale.  Always ask the supplier for the VAT receipt or invoice iof you do not have the right document..

  • Some suppliers will only release a VAT invoice when the goods are shipped – this is the point that the supplier releases the goods and they become a billable product, or
  • When goods are paid for and ownership of the goods changes hands.

Ask at the time of purchase when the transaction is fresh in your mind and your suppliers, to avoid delay.


Book A VAT Review

Seeking VAT peace of mind? Book a review of your VAT processes and last VAT return. Be VAT ready before your next return is due.



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