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TaxationWeb by VAT Solutions (UK) Limited

VAT Solutions (UK) Ltd outline the possible implications of recent EU legislation on invoicing procedures for your businessWhat impact will the EU invoicing directive have on your business?

There has been a lot of talk in the press recently about the EU invoicing Directive and its effects on UK businesses.

The simple answer, we are glad to tell you, is very little.

The idea of the EU invoicing Directive is to bring all EU member states into line so that they all produce similar VAT invoices and provide consistency for businesses trading in different member states. The main problem with what could be described as sloppy invoicing, was from the Southern European states. Most of the Northern European states already had similar invoicing requirements in place.

The main changes will be:

- Minor changes to the contents of a VAT invoice to add 'unit price' and remove the type of supply and some sterling requirements (although you can still do these if you want).

- Conditions for self-billing to be formally placed in Regulations and a Notice.

- Conditions for electronic transmission and storage of invoices to be placed in Regulations.

- Translation of invoices into English. Businesses will no longer have to show the type of supply or the amount of VAT charged at each rate, but they can continue to include this detail in their invoices if they want to.

They will have to show the unit price, which, although normal commercial practice, is not currently mandatory. Also VAT exclusive amounts may be shown in any currency, provided that the total amount of VAT charged on an invoice continues to be shown in sterling. All other mandatory data elements remain the same as now.

The requirement to include unit price on an invoice applies to countable goods or services. For services the countable element might be, for example, an hourly rate or a price for standard services.

If the supply cannot be broken down into countable elements, then the total tax exclusive price will be the unit price. Additionally, the 'unit price' may not need to be shown at all if it is not normally provided in a particular business sector and is not required by the customer.

In addition there will be some changes to the limits for issuing a less detailed VAT invoice. The current limit is set at invoices of less than £100, this limit is being increased to £250.

Full details can be found in Customs Information Sheet 16/03 which can be found on Customs web site at www.hmce.gov.uk .

These changes come in on 1 January 2004, although Customs say they will be taking a “light touch” for the fist twelve months, so in effect you have until 1 January 2005 to implement the changes. Even if you do get it wrong the system of fines for doing so requires a formal written warning first before the imposition of a small fine.

On another related note, although the requirement to show on EU customers VAT number on a sales invoice to secure zero-rating has been in place for more than ten years now a lot of business do not seem to bother doing so. The VATman has announced on his web site that EU VAT numbers can be verified with them on line. This may be a reminder to business to show the VAT number as they can use the 1 January 2004 changes as an excuse to actively enforce the existing regulations as remove zero-rating from those that do no show an EU customers VAT registration number on their invoices.

Appendix

Less detailed VAT invoice must show the following details:

- Identifying number and date.
- Time of supply (if earlier than invoice date).
- Supplier's name, address and registration number.
- Customer's name (or trading name) and address.
- Type of supply.
- Description sufficient to identify the goods.
- Quantity and price for each line.
- Rates and amounts of VAT charged.
- Totals of VAT and goods at each positive-rate of tax.
- Total amount of VAT charged.

Full VAT invoice must show the following details:

4. (1) Subject to paragraph (2) below and regulation 16, and save as the Commissioners may otherwise allow, a registered person providing a VAT invoice in accordance with regulation 13 shall state thereon the following particulars–

(a) an identifying number,
(b) the time of the supply,
(c) the date of the issue of the document,
(d) the name, address and registration number of the supplier,
(e) the name and address of the person to whom the goods or services are supplied,
(f) a description sufficient to identify the goods or services supplied,
(g) the unit price of the goods,
(h) the gross total amount payable, excluding VAT, expressed in sterling,
(i) the rate of any cash discount offered, and
(j) the total amount of VAT chargeable, expressed in sterling.


VAT Solutions (UK) Ltd
11 Winmarleigh Street,
Warrington,
WA1 1NB

(T) 01925 242497
(F) 01925 242498
(M) 07810 433927
(W) www.vatsolutions-uk.com

VAT Solutions (UK) Limited is an established independent firm of Chartered Tax Advisers, formed by Andrew Needham and Steve Allen. The company has a cross-section of clients from multi-national companies through to medium-sized and numerous smaller regional firms of accountants and solicitors. They produce a regular publication 'VAT Voice', which can be downloaded directly from the Internet via the following address: www.vatsolutions-uk.com/newsletter.doc