Once you have climbed on the vat or value added tax bandwagon then each vat invoice issued by you should follow the specified format laid down by the relevant vat department. Most countries in the European Union have adopted vat and although languages vary in different countries, the basic format of this tax invoice is still the same.
Several eu countries have joined the system of vat in a bid to make cross-border transactions easier, increase tax revenues and stop tax leakages that were rampant in the old tax system. Countries like Sweden, Germany, Romania, France, Italy, the UK, Poland, Portugal, etc have clearly understood the advantage of shifting over to vat and have implemented eu vat rules in their own country. Each vat registered trader in his or her country needs to issue vat invoices against taxable sales. For example, a trader in Poland will issue a faktura invoice, which is the tax invoice version in Polish language. Similarly, if your business is located in the UK then you will have to issue an invoice that clearly specifies that you are a vat registered trader charging vat in the UK.
Your invoice should clearly mention your business name along with your business address. It should also mention the serial number of the invoice that should be in sequence with earlier ones. Your vat number should certainly be mentioned in each invoice. You will also have to clearly mention the net rate of any product or service that you have sold to your client along with the applicable vat rate next to it. You will finally need to mention the gross amount of the invoice that includes all vat rates and the final vat amount applicable on that invoice. This format will have to be used if you follow the standard vat accounting system. If, however, you follow the flat vat rate accounting system then your invoice format will be different.
In the UK it is Her Majesty’s Revenue and Customs or hmrc department that issues guidelines on customs, excise and vat matters. You can visit the hmrc vat website to look over the invoice format that will need to be implemented once you turn into a vat registered trader. You will also need to follow all uk vat rules issued by hmrc. On the basis of the invoices that you have issued, you will also need to file regular vat returns.
When you purchase goods or services from another vat registered trader within or outside of the UK, then again you will simply see a similar vat invoice with all required details mentioned within it. This format is very important since if you do need to apply for vat refunds for vat already paid on goods and services that could even be imported from another eu country then your purchase invoice would clearly need to mention the vat rates against those goods or services.
A vat registered trader needs to follow a specific vat accounting system that also includes issuing of special invoices that clearly specify the amount of vat being collected. You too will need to follow the system prescribed by hmrc when you issue a vat invoice for goods or services sold in the course of your business.