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 can't 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.