News
December 2007
Changes to the VAT invoicing regulations with effect from 1 October 2007
VAT regulation changes were made on 23 July 2007 and make minor modifications to the format of invoices which are effective from 1 October 2007.
The changes follow infraction proceedings begun by the European Commission. Consultation suggests that the effects on most UK businesses will be minor. Businesses most likely to be affected are those:
- Using the margin scheme for second-hand goods, antiques, works of art, and collectors’ items
- Involved in making travel related supplies that fall within the scope of the Tour Operators’ Margin scheme
- Involved in intra EU supplies of goods and services
- Making supplies where the customer accounts for the VAT
The changes
The number on the invoice
Regulation 14(1)(a) will be amended to include a requirement for an invoice to bear a sequential number based on one or more series which uniquely identify the document.
Consultation supported the view of HMRC that this formal legal change will have little impact on the way invoices are numbered by the majority of businesses.
Reference to the second-hand margin schemes
Regulation 14 will be changed to adds a requirement that invoices under the special arrangements for second-hand goods, antiques, works of art and collectors’ items musty include a reference to the nature of the treatment, which accords with the Directive. That means a reference to either the relevant EC or UK legislation, or including any other indication of the treatment.
Reference to the Tour Operators’ Margin Scheme (TOMS)
Regulation 14 will be changed to add a requirement that invoices under TOMS must include a reference to the nature of the treatment, which accords with the Directive.
Businesses can include a reference to the relevant EC or UK legislation, or include any other indication of the treatment. The choice of legend is a matter for individual businesses to decide.
The new rule only applies to those occasions when an invoice is issued to another taxable person.
Reference to the reverse charge or exemption (including zero rate dispatches to other Member States)
Regulations will be changed to add a requirement that zero rate dispatches and exempt or reverse charge invoices will require a reference to the grounds for the treatment when the supply is to a business customer based in another Member State.
Businesses can include a reference to the relevant EC or UK legislation, or include any other indication of the treatment. The choice of legend is a matter fir individual businesses to decide.
Regulation 14 will be amended to make it clear that the requirement also applies to UK supplies where the customer accounts for the VAT, such as the gold scheme (VAT Act 94 s55) or reverse charge requirement introduced under Missing Trader Intra-Community (MTIC) rules in VAT act 1994, s55a.
The regulations make it clear that a requirement to issue invoices for exempt supplies only arises when the supply is business to business, across an EU border, and an invoice is required by the Member State of receipt. Because practise varies widely across Member States, HMRC guidance is that businesses should be guided by their customers.
References required
The regulations will be changed to make it clear that an invoice issued under the following procedures must contain a reference to the relevant EC or UK legislation, or include any other indication of the treatment. The choice of legend is a matter for individual businesses to decide:
- Regulation 17(2)(b) covering section 14(6) supplies to persons belonging in other Member States
- Regulation 18 (2)(d) covering section 14(1) supplies by intermediate suppliers
- Regulation 19(2)(d) covering section 14(2) supplies by persons belonging in other Member States.
Further Information
VAT Information Sheet 10/7 provides additional details concerning the changes, together with a list of Frequently Asked Questions (FAQs) that you may find helpful. Further information in relation to the consultation and the background to the changes can be found on the Joint VAT Consultative Committee (JVCC) page of the HMRC internet site, which includes two VAT invoicing consultation documents.
If you need further information about VAT invoicing, please ring the National Advice Service on 0845 010 9000 (if you are outside the UK please call +44 2920 501 261).
