Invoice vs. VAT invoice

At first glance, VAT invoices look no different to standard invoices – and in many ways, these two types of invoices are extremely similar. However, there are a few key differences between standard invoices and VAT invoices, so it’s important to know what sets them apart.

This article compares standard invoices and VAT invoices, looking at who can issue them, the information that you need to include and how you should keep records of your invoices.

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Who can issue an invoice vs. who can issue a VAT invoice

A VAT invoice is a specific type of invoice that should only be issued for sales liable for VAT. This means that VAT invoices should only be issued by VAT-registered businesses, and they should only be issued for goods or services that are subject to sales tax.

If your business isn’t registered for VAT, you shouldn’t charge sales tax, and you should always issue standard invoices instead of VAT invoices.

Information on invoices vs. information on VAT invoices

Whether you send standard invoices or VAT invoices, every invoice you issue should include details about:

  • Your business: your business name, registered address and Company Registration Number (if you have one)

  • Your customer: your customer’s name, address and contact details

  • The invoice: a unique invoice number, the date of issue and the word ‘Invoice’

  • The items sold: unit prices, quantities, any discounts provided and the total amount due

As well as these details, VAT invoices should also show some extra information about tax, including:

  • Your VAT number

  • The VAT rate(s) charged

  • The total amount before VAT

  • The total amount of tax due

  • The total amount due including VAT

As standard invoices are only issued for sales that aren't liable for sales tax, they don't need to include these extra details.

Record keeping for invoices vs. record keeping for VAT invoices

As a freelancer or small business owner, you’re responsible for keeping complete, detailed records of your financial transactions, so it’s important that you have a good system in place for documenting your income and expenses.

Whether you send standard invoices or VAT invoices, you can usually choose between using online invoicing software to keep digital records and keeping physical, paper copies of your receipts and invoices.

If your business is registered for VAT, you need to keep records of your VAT invoices for a minimum of six years. HMRC might use these records to confirm that you’ve been charging and paying the correct amount of VAT.

If your business isn't registered for VAT, you need to keep records of your invoices for a minimum of five years. HMRC might use these records to check whether you’ve been completing your Self Assessment properly.

How to issue invoices and VAT invoices with SumUp Invoices

SumUp Invoices is invoicing software that makes it easy to create both standard invoices and VAT invoices from your computer, phone or tablet.

How to issue a standard invoice with SumUp Invoices

With SumUp Invoices, you can create and send invoices in less than a minute. Simply enter your customer and item details on our invoice template, and the system will automatically calculate the totals and make sure that you’re not missing any mandatory information.

How to issue a VAT invoice with SumUp Invoices

Before sending a VAT invoice with SumUp Invoices, you first need to activate VAT on your profile. You can do this by navigating to the “Settings” tab, scrolling down to “Tax and Registration”, and ticking the box “My business is VAT registered”. You can also enter your VAT number on the same page.

You can then start sending professional VAT invoices to your customers from the “Invoices” tab. You can choose to include a payment link directly on your invoices so your customers can pay instantly with a credit card online.

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