Apply to HMRC as soon as VAT registration is required
- You are liable to pay HMRC the output VAT due on all supplies you make from the date you are required to register, rather than when registration is complete.
Adjust your pricing at the same time
- While the application is processed, your pricing should reflect the VAT liability less any input tax that can be reclaimed.
- Even if you decide to keep your prices unchanged to avoid losing customers, you will still have to pay VAT to HMRC, calculated by treating the sales value as including VAT. For standard-rated supplies, output VAT will be one sixth of the total price charged.
- You must still only show the gross amount on your invoices. VAT cannot be shown as a separate item until a VAT number is allocated. Tell customers that proper VAT invoices will be issued once you are registered.
Once registered for VAT, a business must issue VAT invoices
- You do this for every sale to a VAT-registered customer.
- This does not apply to sales of exempt or zero-rated supplies unless they are included in a sale with other VATable items. If so, the invoice should show separate totals.
- You must retain copies of VAT invoices for your files.
The invoice must include specified details
- a unique invoice number
- the tax point (see ‘VAT returns’) and, if different from the tax point, the date of issue
- your name, address and VAT registration number
- the customer’s name and address
- type of supply (eg sale, lease, rent)
- description of goods or services supplied
- unit cost and VAT rate
- discounts, if any
- total cost excluding VAT
- total VAT
- total payable including VAT.
A VAT invoice is not necessary for sales direct to the public unless one is requested
A less detailed invoice can be used for retail sales below £250, showing just:
- the date
- suppliers’ name, address and VAT number
- a description of the supply
- VAT rate
- total VAT inclusive cost.