What is a VAT invoice?

VAT (Value Added Tax) is a consumption tax used across the UK and EU. The equivalent in Australia, New Zealand, Canada, India and Singapore is called GST, and the US uses sales tax. A VAT invoice is the document that lets the tax flow correctly through the chain: it tells your customer exactly how much VAT they paid, which a VAT-registered customer can then reclaim from the tax authority.

Because of this reclaim mechanism, a VAT invoice carries more required detail than an ordinary invoice. Without the right information, your customer cannot recover the VAT — so getting it wrong has a real cost for them.

A full VAT invoice includes everything on a standard invoice plus VAT-specific fields. A VAT-registered supplier must show a unique, sequential invoice number; their business name, address and VAT registration number; the invoice date (and tax point, if different); the customer's name and address; a description of the goods or services; the rate of VAT for each item (e.g. 20%, 5%, 0%); and the amount excluding VAT, the VAT amount, and the total including VAT.

For smaller sales (in the UK, totals up to £250 including VAT), you can issue a simplified VAT invoice with fewer fields — you can show the gross amount and the VAT rate without itemising the VAT separately for each line. For larger sales, a full VAT invoice is required.

invoiceme adds any number of named tax lines — VAT, GST or sales tax — at whatever rate you set, and shows the tax amount and gross total clearly, so your invoices meet what a VAT-registered customer expects.

If you're VAT-registered and you make a standard-rated or reduced-rated sale to another VAT-registered business, you must issue a VAT invoice, generally within 30 days of the supply. If you're not VAT-registered, you must not charge VAT or issue a VAT invoice at all.