Change to VAT invoicing requirements

Following advice by the European Commission (EC) that several aspects of the EC Invoicing Directive have not been fully adopted in the UK, HM Revenue & Customs (HMRC) is introducing new regulations from 1 August 2007.

The most significant changes will be the requirement for invoices to be sequentially numbered (rather than to just bear an identifying number) and for additional information to be recorded on invoices issued in respect of cross-border EU supplies.

In cases of cross-border EU supplies, exempt supplies or where the customer is liable for payment of VAT, the invoice must show a reference to the applicable provision of the EC Directive that enables the supply to be zero rated or treated as a reverse charge. Alternatively, the relevant provision in UK legislation can be referenced (instead of the EC Directive).

The EC advises that certain exempt services, for which invoices are not currently required in the UK, will require invoices when supplied in the EU. However, HMRC has indicated that these changes may require further consultation and will not be introduced until after August.

What next?

Businesses in the UK will need to ensure that their accounting systems are updated in time for the new requirements. Businesses that are currently changing their systems should consider making provision for these changes now. If you have any concerns about how the proposed changes may affect your business, please discuss them with Stokes & Co.