New announcement. Learn more

CHARTERED ACCOUNTANTS (ICAEW)

News and advice to help make your property business a success

Landlords TaxProperty TaxLandlords Tax ReturnsLandlords AccountsProperty Tax ReturnProperty AccountsLandlords FinancialLandlords AccountantTax ReturnsTaxChartered AccountantsOnline AccountantOnline BookkeepingOnline Tax ReturnsYour Online AccountantYour Online BookkeeperVATBusinessadviceHMRCAccountingCashflowDividendsExpensesPAYEPropertyProperty AccountantSmallbusinessBusinesstipsCapital Gains TaxFHLsFurnished Holiday LettingsIhtexemptionsIncome TaxInheritance TaxNICSDLTTaxplanningCgtInvestment Property TaxLandlord RepairsPensionProperty bookkeeperProperty LettingTax ReliefTaxreturnVAT invoiceAllowable Business ExpensesAnnual Exempt AmountBad Debt Tax ReliefBusiness ExpensesBusiness RateCapital AllowancesCapital GainsCapital gains tax propertyCashbasisChild BenefitComplianceDeductibleexpensesDisincorporationEmployment AllowanceFinanceFinancialmanagementGiftsHMRC complaintsHoliday Lets TaxISALettingsMaking Tax DigitalMakingTaxDigitalMileage AllowanceMobilephonesNational InsuranceOverlapreliefPartnershipPartnershipbusinessesPprProperty Company TaxProperty Tax Deductible ExpensesPropertyallowanceReimbursedexpensesRent a Room ReliefRentalResidence ReliefSmall BusinessTax free incomeTimetoPay60 day capital gains limitAbolitionclass2AccrualsbasisAcquisitionsAdvisoryfuelratesAIAirBnBAlphabet sharesAmapAnnual Tax on Enveloped DwellingsAppealArtificial intelligenceAssessmentAsset disposalAssociated CompanyAssociated Company Tax RulesAutumnstatementBad DebtBaddebtsBadgesoftradeBADRBeancounterBenefits in KindBreakeven PointBudgetBusiness adviceBusiness asset defermentBusiness coachBusiness ContinuityBusiness EntertainmentBusiness RatesBusiness Rates ReliefBusiness tipsBusinessgrowthBusinesstypesBuy or Lease EquipmentBuytoletCapital Allowances for CarsCapital GainCapitalallowancesCapitalexpenditureCar Capital AllowancesCarry Back LossesChange of Tax BasisChatGPTCIS SchemeClass 2 NICCommon TenantCompanies ExpenditureCompanies HouseCompany Account DeadlinesCompany Account FilingCompany Strike OffCompany Tax Efficient PropertyCompanyassociationCompanyloanstaxfreeCompulsory Strike OffConstruction Industry SchemeContacthmrcContentmarketingContributionsCorporation Tax LossesCorporation Tax New RegimeCorporation Tax RatesCorporationTaxCostsCryptocurrencyCustomerlistimplicationsDeductible Business ExpensesDeductionsDemergerDepreciationDevelopmentDirectorsDirectors LoansDirectorsloansDisallowable Business ExpensesDiscoveryDividend allowanceDividend Allowance ReductionDividend PlanningDividendallowanceDLADomestic Items Tax ReliefDormantcompanyEISEmployee DiscountEmployee managementEmployeecompensationpaymentsEmployeeOwnershipTrustEndoflifeplanningEnquiryEnterpriseResourcePlanningEntertainmentEntrepreneurmindsetEquityExpenses Allowed For TaxExtrabenefitEyetestsFlat Rate SchemeFlippingFurnished Holiday Lets TaxGift AidGift AllowanceGrowthhacksHelp to pay tax billsHICBCHMO Licensing FeesHoldoverreliefHoliday Lettings TaxHow to apply for a Business LoanHow to Extract ProfitHumourHybridIllegaldividendsIncomeIncome and GainsInflationary GainsInfluencersInheritance Tax Nil Rate BandInterest RatesInterestreliefInterestrestrictionIR35Joint TenantKeypersoninsuranceLandlords Self AssessmentLate vat registrationLBTTLeadgenerationLeadmagnetLeanbusinessmodelLetting Agent DisbursementsLetting Agent RecharresLettings ReliefLifetime LimitLimitedcompanyLiquidation DemergerLoaninterestLong Lets TaxLongserviceLTTMainresidencereliefManaged LetsManagement accountingMaritalhomedivorceMarriage allowanceMarriageallowanceMileage paymentMinimumwageMixedusesdltMortgage costsMortgage Interest ReliefNew propertyNewcompanycarfuelratesNewnicrulesNIC 2023 to 2024NIC savingsNicdisregardNicreductionNMWNmwerrorsNon Allowable Business ExpensesNon-taxableNudgeletterOptiontotaxvatOverpayment ReliefOverseas propertiesPaperformPartnership schemesParttimePatternofoccupancyPAYE by Direct DebitPayrollingPenaltypointsPension Payments Tax ReliefPensioncontributionsPensionsPerformance-reviewsPeriodofgracePeriodsofabsencePersonal ExpensesPersonal financePersonalallowancePersonalguaranteesPostcessationreliefPretradingexpensesProfitProfit-and-lossProfitAndLossProperty AllowanceProperty Development CompanyProperty IncorporationProperty Investment CompanyProperty investor accountsProperty investor tax tipsProperty Rental BusinessProperty TradingPropertycompanyR40Recharges by Estate AgentsRegularpaymentsReliefRent your driveRentaroomResearch & DevolopmentResidential property gainsResidentialsdltRetail stock controlRetainedprofitsRevenueRoom for rent taxRtiSASalarySavingsSDLT changesSection 455 TaxSection455taxSelective Licences LandlordsSelf AssessmentSelf-employednicSelfemployedSelling OnlineSeperationServicechargesSettlementslegislationSimplified ExpensesSmallbizSmallbusinessratereliefSoftwareSole TraderSpring BudgetStaffpartiesStamp dutyStudent Loan DeductionsSuccessJourneyTax Allowance on DrivewaysTax AllowancesTax BreakTax CodesTax DeadlinesTax DeductionsTax Filing DeadlinesTax Free ChildcareTax ImplicationsTax on Company VansTax positionTax RefundTax tips for landlordsTaxbillpaymentsTaxconsequencesTaxincentivesTaxpositionTaxpositionassetsTaxreliefTaxreliefsTaxsesTerminationpaymentsTipsTrade professionalTrading lossesTrainingTransfer AssetsTransfer Assets Between SpousesUmbrellacompanyUndisclosedincomeUnpaid RentVAT Bad Debt ReliefVAT DeadlinesVAT DisbursementsVAT PenaltiesVAT registrationVAT Reverse ChargeVatpenaltiesVatregisteredVatregistrationthresholdWellbeingWorking from home
TAGS

When is a VAT invoice not a VAT invoice?

Although suppliers such as mobile phone providers are VAT registered, a careful look at the invoices issued to customers shows the words 'this is not a VAT invoice' – why is that?

A valid VAT invoice is a crucial document for reclaiming VAT on purchases. It can be full, simplified or modified, depending on the value of supply and the information it includes. A full VAT invoice is issued for costs exceeding £250 and includes the date and time of supply, the supplier’s name and address, and VAT registration number, as well as the recipient’s name and delivery address. Omitting these details can result in an invalid document for VAT purposes.

Simplified invoices include the same information as a full invoice, excluding the date, the customer’s details, subtotal, total VAT amount and the price and quantity of each item. It shows the total VAT inclusive amount to be paid by the customer and can only be issued for purchases up to £250. A modified invoice must be agreed upon with the customer to include the same information found on a full invoice, but the product prices and total amounts will be VAT inclusive. Modified invoices are only issued for sales exceeding £250 that include taxable products.

Whichever of these VAT invoices is used, each confirms the tax point. In most cases, the basic tax point for a supply of goods occurs on their removal, usually the time of delivery by the supplier or collection by the buyer. The basic tax point for a supply of services is when the services are performed. However, the actual tax point overrides the basic tax point, which will happen if the supplier issues a VAT invoice or receives a payment in advance of the basic tax point. A later tax point can also arise where the supplier issues a VAT invoice within 14 days after the basic tax point.

An invoice which shows the words 'this is not a VAT invoice' does not create a tax point because it is not a VAT invoice. The tax point is created when the invoice is paid or is the date of the supplier’s invoice, if within 14 days following the basic tax point. Once paid, the supplier must issue a proper VAT invoice to the customer (usually on request). The issue of a 'not a VAT invoice' is therefore a means for the supplier to

potentially shift the tax point to a later date so that the supplier has the payment from a customer before having to pay HMRC. The benefit for the supplier is cashflow.

This approach is also seen with pro forma invoices. A pro forma invoice is a preliminary bill of sale sent to buyers in advance of a shipment or delivery of goods or services. It often includes a quotation or estimate and does not serve as a demand for payment. Issuing a pro forma invoice does not create a (basic) tax point. Once the customer pays, whether in part or in full, this creates an actual tax point, and the supplier issues a proper VAT invoice.

The phrase 'this is not a VAT invoice' is commonly found with mobile phone contracts, often taken out in the personal name of a director or employee who then reclaims via expenses. To the mobile phone network, the customer is the individual, not a business. By issuing a 'not a VAT invoice' document, the output is declared when the customer pays.

Practical point

Strictly, the VAT should not be reclaimed if a director claims the personal mobile invoice through the business because the documentation will state 'this is not a VAT invoice’. However, HMRC rarely takes issue with such invoices, although it may if the claim is for another type of supply, depending on the amounts of VAT involved.