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. 🙂