Is that Invoice correct or invalid for VAT?

Its a common issue, how often do directors buy things in their own name or perhaps use their personal amazon prime account for convienence.

The invoice is then addressed to them not to the company!

VIT13400 – VAT Input Tax basics: when input tax can be claimed by the business on supplies to employees

You must take care in applying the supply rule when the third party is an employee. Here are some examples of supplies made to the employer, provided the employer meets the full cost, even when it may look as if the employee has received the supply:

• road fuel and other motoring expenses;
• subsistence costs such as meals and accommodation necessarily paid for whilst away from the normal workplace;
• removal expenses arising from company relocations or transfer of staff;
• sundry items such as small tools or materials purchased on site.

This list is not exhaustive.

You should decide whether the supply is legitimately paid for by the employer for the purpose of the business. If it clearly is then input tax should be recovered. This is in keeping with the intention of the legislation.

Simplified VAT Invoices for items worth less than £250 – these invoices don’t show the customers details

Simplified invoices only need to include the following information: 

• The name, address and VAT registration number of the supplier
• A unique invoice number
• The tax point, also known as the ‘time of supply’ – (This is the date that the transaction actually takes place and is used for VAT purposes. The tax point may be different from the invoice date.) 
• A description of the products or services that are sold
• The VAT rate of each invoiced item – (If an item is VAT exempt or zero-rated, then the invoice must show that there’s no VAT charged on that item.)
• The total amount, including VAT

Unlike an ordinary invoice, it’s not necessary to include your customer’s name and address, or the date the invoice was issued. Other information about prices and VAT, such as the total amount of VAT, the price of each item without VAT and the pre-tax total, can be omitted. 

What if the above don’t apply and you can’t get the supplier to correct the invoice? Will HMRC reject you VAT reclaim?

First you need to keep notes of your attempts to get a valid invoice.

Then to persuade HMRC that the VAT reclaim is valid you will need to prove

1. There has been an actual supply of goods or services to your business
2. Your business received the goods and services and that they don’t belong to another person or business
3. You have some documentary evidence to support the claim such as contracts, purchase orders, correspondence, you may also be able to link the purchase to a sale

VIT31200 – How to treat input tax: alternative evidence for claiming input tax

Questions to determine whether there is a right to deduct in the absence of a valid VAT invoice

• Do you have alternative documentary evidence other than an invoice (for example a supplier statement)?
• Do you have evidence of receipt of a taxable supply on which VAT has been charged?
• Do you have evidence of payment?
• Do you have evidence of how the goods/services have been consumed within your business or evidence about their onward supply?
• How did you know the supplier existed?
• How was your relationship with the supplier established? For example:
• How was contact made?
• Do you know where the supplier operates from (have you been there?)
• How do you contact them?
• How do you know they can supply the goods or services?
• If goods, how do you know they are not stolen?
• How do you return faulty supplies?

Where:

• the supply is of goods not specified as subject to widespread fraud and abuse; and
• the taxpayer can provide satisfactory alternative evidence of the supply (questions 1-4); and
• there are no grounds to suspect abuse or fraudulent intent on the part of the claimant

HMRC staff should normally exercise their discretion to allow the taxpayer to deduct the input tax.

steve@bicknells.net