Once you turn into a VAT registered trader in any country that has adopted the system of vat or value added tax then you need to follow vat invoicing norms set by the vat department of that country. If you are a trader with vat registration in the UK then you need to follow norms issued by Her Majesty’s Revenue and Customs department or hmrc, which in turn follows eu vat rules set by the European Commission that acts as a guide for all eu countries that follow vat.
Vat has become increasingly popular among eu countries since it allows for increased tax collection with fewer loopholes through which traders can evade such taxes. The European Commission has also laid down guidelines regarding all aspects of vat including issuing of vat invoices and filing for vat refunds for vat paid in another country, among several others. The invoicing norms laid down by hmrc vat department ensures that your tax invoice mention all details regarding vat charged so that filing of vat returns becomes easier. Such invoices can also be cross-checked by a sudden vat audit conducted by hmrc vat officers who can immediately scrutinize the vat amounts charged on each invoice.
Your vat invoice will need to declare your vat registration number, your company’s name, address and invoice number that will need to be in sequence to previous invoice numbers. In addition to your vat number and other details, your invoice will also need to mention the type of goods or services sold along with the percentage of vat applicable on each of those goods or services. You will also need to mention vat rates and amounts based on your calculations. Finally, you will need to mention the total amount of that invoice including vat. Such a system of vat invoicing is followed in all eu countries that follow vat.
If you follow the standard vat accounting method then the vat details in these invoices will also help you while filing of vat returns since it will allow you to calculate the sum of vat paid and collected during a particular month, quarter or year depending on the period of filing your vat returns. If you have chosen the vat flat rate of accounting then these invoicing norms will not apply to you although you will still need to mention the vat amounts in your invoice.
If you have imported goods into the UK from another eu country where you have already paid vat then based on the vat invoices of that country, you can easily find out the amount of vat paid there and apply for a vat reclaim on that amount so as to avoid the problem of double-taxation. Anyway, it will be better if you hire an expert vat consultant or agent that can guide you on how to prepare your vat invoices, file your vat returns and apply for vat refunds. The hmrc website too does its part in educating vat registered traders on how to prepare vat invoices by displaying samples of such invoices on its site.
Once you turn into a vat registered trader in the UK or any other eu country that has embraced the system of vat tax then you need to follow all vat rules, directives and amendments issued by the European Commission and respective countries. You should certainly follow vat invoicing norms set by the vat department so as to remain on the right side of the law as well as make it easy for you to extract vital vat data from your invoices whenever you need to do so.