One of the great joys of running a business is VAT accounting.
When we first started processing invoices for VAT, we read HMRC's useful guidance on what VAT invoices must show. Since then, a surprising proportion of invoices for larger purchases have turned out to fail to meet the letter of the requirements as we read them. Looking at the section "What a VAT invoice must show", the first bullet list is never a problem. But the next bullet list, introduced with the text "For each different type of item ...", is seemingly not met in a lot of cases. A particular issue is that a delivery charge is often itemised separately, but without the VAT rate on it being explicitly shown. The bearing of this on the validity of the invoice doesn't appear to be affected by the guidance on delivered goods, which is more about what rate should apply to any delivery charge, rather than whether the rate needs to be shown in order to produce a valid invoice.
I've now produced some examples to illustrate the issue we're seeing.
Small purchases are easy: any purchase coming to 250 GBP or less including VAT only needs to meet the requirements for a simplified VAT invoice, and we haven't seen any cases where an attempt at doing so failed.
What has been surprising is the mismatch between our reading of the rules, and the readings by some suppliers. Asking people to look at the requirements starting "For each different type of item ..." doesn't appear to lead to convergence.
We sometimes hear that no one else has raised the issue.
Are we misinterpreting the rules? Have we missed other guidance elsewhere that means these are actually all valid? Do HMRC overlook failure to state the VAT rate on carriage, or to state the VAT rate at all, if the invoice is all standard rate and it's possible to infer the information they require from other information on the invoice?
