Yes, you can issue an invoice without Value Added Tax (VAT) if you are not registered for VAT, if your business falls below the mandatory registration threshold, or if the goods/services sold are exempt. In these cases, you must not show a VAT amount or registration number, and it is recommended to clearly state on the invoice that the price does not include VAT.
Invoices and VAT numbers if you're not registered for VAT
VAT numbers are only given to businesses that have actually registered for VAT, so if your business isn't VAT registered, it's perfectly fine to send invoices that don't include a VAT number.
An official Non-VAT receipt must include:
Only VAT-registered businesses can issue VAT invoices and if you're VAT-registered, you must issue a VAT invoice whenever you supply standard rate or reduced rate goods or services to another VAT-registered person. Normally you must issue a VAT invoice within 30 days of the date you make the supply.
An accountable person must issue a Value-Added Tax (VAT) invoice where they supply goods or services to any of the following: another accountable person. a Department of State. a local authority.
If your business is new and you haven't had the chance to register for VAT just yet, you can still issue an invoice without VAT.
You must start charging VAT at the appropriate rate on taxable sales once you are a VAT registered trader. This can be as a consequence of either compulsory or voluntary registration.
Failure to register as VAT taxpayer: PHP 500 to PHP 1,000, plus surcharges. Non-issuance of official receipts/invoices: PHP 1,000 to PHP 50,000 per violation, with possible closure of business.
While a commercial invoice is simply the standard type of payment demand issued after the delivery of goods and services, VAT invoices have a much more specific purpose. In short, you must issue a valid VAT invoice to charge VAT on sales or reclaim VAT that you're charged for goods and services.
One VAT-registered business sells taxable goods or services to another. The seller must issue a VAT invoice for their records, and the customer needs an invoice to reclaim VAT on their purchase.
: What is the invoicing requirement for a Non-VAT registered person? : A Non-VAT-registered person shall issue a duly registered Non-VAT Invoice for every sale, barter, exchange or lease of goods or properties, and for every sale, barter or exchange of services valued at Five Hundred Pesos (Php 500.00) or more.
The issue of a 'not a VAT invoice' is therefore a means for the supplier to potentially shift the tax point to a later date so that the supplier has the payment from a customer before having to pay HMRC. The benefit for the supplier is cashflow. This approach is also seen with pro forma invoices.
When you issue invoices, it does not matter if your customer is not VAT registered. You must still collect the VAT and pay it to HMRC. Your unregistered customers will have to pay the full amount including VAT, but they will not be able to reclaim the VAT from HMRC.
Charge a Gross Amount: While you don't have your vat invoice number yet, you must charge your customers the total price, including the VAT. For example, if your service is £100 plus VAT, bill £120. This ensures you collect the VAT amount that will be due to HMRC.
Manner of Issuing Invoice
The invoice shall be prepared in triplicate, in case of supply of goods, in the following manner: (a) The original copy being marked as ORIGINAL FOR RECIPIENT; (b) The duplicate copy being marked as DUPLICATE FOR TRANSPORTER; and (c) The triplicate copy being marked as TRIPLICATE FOR SUPPLIER.
Conversely, invoices without sales tax often arise from transactions involving tax-exempt entities, interstate commerce, or exports, necessitating documentation like exemption certificates for validation.
HMRC stipulates that an invoice without VAT must still include the following details:
Let's explore three key types of invoices, each tailored to specific scenarios and purposes, and discover when and why to use them:
Contrary to popular belief, an invoice is not the same thing as a receipt.
Examples of VAT exempt goods and services
A business must register for VAT if the taxable supplies and imports exceed the mandatory registration threshold of AED 375,000.
If you collect VAT but don't have a VAT Number, SARS can: Fine you. Demand repayment. Flag your business as non-compliant.
VAT (Value Added Tax) is a tax added to most products and services sold by VAT -registered businesses. Businesses have to register for VAT if their VAT taxable turnover is more than £90,000. They can also choose to register if their turnover is less than £90,000. This guide is also available in Welsh (Cymraeg).