Tweak Your Biz » Finance » Help Prevent VAT Fraud – Get Your Invoices Right

Help Prevent VAT Fraud – Get Your Invoices Right



Last week I had to purchase some equipment for the local company I do accounts for. As there was approximately €100 VAT involved I asked for an invoice in the shop. It was written out on headed paper in front of me and no copy made for the sellers records (and VAT return). Although it was just enough information for our records to be able to claim the VAT back I wondered if the VAT paid would actually make it to the Revenue’s coffers. This struck a chord in my Accountancy brain as it didn’t balance!

Over my twenty-four years in accounts I have seen many invoices; some are laid out simply and correctly, some don’t give the required information and some could be easily copied for VAT and accounts fraud.

Businesses should be aware that when a VAT inspection is made of company’s books the officers take note of invoices from other companies and their VAT numbers and they have the authority to trace these invoices back to ensure the VAT has been accounted for properly.  I came upon this practice a lot when working in the computer export industry in London as it was ripe for VAT fraud at the time.

Of course if someone wants to commit fraud they will find a way to do it no matter what, however to try and make sure your company invoices are not used here are a few steps to follow and also to ensure your invoices are actually valid for VAT purposes. The points marked with a ** are compulsory for VAT invoices.

  • Use headed paper, preferably with a company logo that is coloured.
  • Print your invoices on special paper rather than the normal copying printer paper.
  • Two-part or three-part invoice paper is great as your copy will match the customers copy. On the three-part invoice the third sheet may also be a delivery note if applicable.
  • Your company name, address and contact details should be on the invoice **
  • Your VAT number must be on the invoice if you are VAT registered **
  • Your company registration number should be on the invoice if you are a Limited company.
  • Decide on an invoice layout and keep to it.
  • There must be a date on the invoice. **
  • There should be an invoice number that runs consecutively from your system. **
  • Your customer’s company name and address should be on the invoice. **
  • A description of the service/product sold must be on the invoice. **
  • A net amount before VAT will be shown.
  • The VAT percentage rate will be shown.
  • The VAT amount will be shown. **
  • A total for the invoice will be shown and a currency sign, e.g.  €, £, $. **
  • Payment terms should be on the invoice.
  • Show any other information that is applicable, e.g. delivery date, item prices etc.
  • Ensure a hard copy invoice is posted even though you may have emailed it.

If you are not VAT registered you cannot charge VAT on your invoice.

I hope the above is useful information for those in business. Now I must get a logo and headed paper for my little business I think. :)



The Author:

Sian Phillips is the Managing Editor of TweakYourBiz.com and a Moderator on Bizsugar.com. Sian is also the accountant for her clients Henparty.ie, (Dragons Den winner 2009), Clearwave.ie and Comserv.ie. With over 20 years’ worth of experience in business and accounting Sian provides help to the SME sector. The other half of Sian’s day is spent workIing in the Social Media space; writing blog posts and conducting interviews for TweakYourBiz.com, plus writing for clients globally about Social Business and Accounting. She is a qualified Accountant with an Honours Diploma in Journalism too. http://www.tweakyourbiz.com

Add Your Comment

  • http://www.tweakyourbiz.com Niall Devitt

    Hi Sian, it’s happened to me too on more than one occasion :)

  • http://twitter.com/IrishSmiley Frederique Murphy

    Thanks Sian, it’s a very useful post, whether you are new in business or to double check you are a-OK! I also think, it should be an ongoing education, and it always amazes me that very few cashier agents know how to handle such a query; I’ve got so many blank look when asking, could I please get a VAT invoice for this purchase? PS, depending on where the readers who are reading this live, they should check as the legal letterhead requirements are not the same, from country to country.

  • http://www.sianphillips.ie Sian Phillips

    Thank for the comment Frederique and for pointing out it’s different letterhead requirement in other countries. I hope it makes people more aware of what to look out for.

  • http://www.seefincoaching.com/blog Elaine Rogers

    Hi Sian,nI have invested in headed paper specifically for this purpose. Although, some accounting packages offer specific paper also.nI have a question/clarification: I have been asked specifically if I would like to receive soft copies of invoices from service providers, and I have agreed to this. But the hard copy has stopped as a consequence. nSo, from what you’re saying above, are they not abiding by legal requirements? (one company continued to send hard copies, and I actually contacted them to say not to bother) If I print them out myself, do they qualify as legal invoices?nnGreat post :)

  • http://www.sianphillips.ie Sian Phillips

    Hi Elaine, it’s not a legal requirement to post out an invoice if it has already been emailed it was just a suggestion to help as mentioned above. The points with ** against them are compulsory. Thanks for asking :)

  • http://www.sianphillips.ie Sian Phillips

    Hi Contractor Accountant. If you check my blog you will see the latest posts – it is updated regularly

  • Kg29

    Thanks for this Information. Its already happened with me. My supplier charged vat to me as i am export goods i have taken back vat from hmrc. on hmrc visit i came to know my supplier is not registered with vat. he provided wrong vat no on his invoice. i dont know what to do? legally where i am stand? please advice if you can…. thanks

  • http://www.sianphillips.ie Sian Phillips

    Hi Kg29, I’m sorry to hear you have been caught like this. I suggest you get professional advice from a local accountant to you. Or maybe even the revenue can recommend what you can do. In future if paying over a lot of VAT always check the VAT number that your supplier is giving you and that it matches up with the address etc they are giving you. Good luck

  • Kg29

    Thanks sian