Valid VAT invoices
It is important to include enough information on your VAT invoices to allow your VAT-registered customers to reclaim the VAT charged.
HMRC will block recovery of VAT charged on invoices that don’t clearly state what goods or services were supplied. HMRC officers are particularly looking at invoices in the construction sector (following the introduction of the reverse charge for VAT) and those issued by employment agencies.
Where your business supplies labour or staff, your customers will be rightly annoyed if HMRC says they can’t reclaim VAT because your invoice description merely states: “labour supplied” or “staff supplied”.
An invoice for the supply of labour should, as a minimum, detail the number of workers supplied, the number of hours, or days, worked, the dates the work was undertaken and the site address where the workers were supplied. HMRC would also like to see details of the nature of the work undertaken, but this information can be provided in another document such as a timesheet or contract, which is cross- referenced on the invoice.
To avoid HMRC raising questions about your sales invoices and to maintain a good relationship with your customers, populate your invoices with more detail about staff supplied and cross reference where possible to contracts or timesheets.
Note that, as well as causing problems for your customers, your business will be liable to penalties if it issues incorrect VAT invoices.
We can review your standard invoices to check if they contain enough information to satisfy HMRC.