HMRC invoicing requirements and best practices for the United Kingdom

Learn the best practices for setting up your invoices to ensure they meet business reporting requirements.

Invoicing
Invoicing

Stripe Invoicing is a global invoicing software platform built to save you time and get you paid faster. Create an invoice and send it to your customers in minutes—no code required.

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  1. Introduction
  2. An introduction to invoicing in the UK
  3. Which circumstances require an invoice?
  4. What does an invoice need to contain?
    1. Full invoice
    2. Modified invoice
    3. Simplified fields
  5. What else should I consider while issuing an invoice?
    1. Payment due date
    2. Language
    3. Currency
  6. When does an invoice need to be issued (timeline)?
  7. Can I leverage electronic invoicing?
  8. How long should an invoice be retained?
  9. How Stripe can help

An introduction to invoicing in the UK

An invoice is a document that itemizes and records a transaction between a business and a customer. Invoices are frequently used in B2B payments that have high average volume order values or require custom contracts with customers. Similar to the rest of Europe, invoicing is very common in a business setting in the UK, as most B2B payments are conducted by bank transfers that are almost always initiated with an invoice.

Invoices broadly serve two purposes:

  1. Act as a transactional document of record for business reporting purposes (e.g., taxes)
  2. Act as a request for a payment, detailing how much the customer owes and the payment terms

In this guide, we will cover best practices for setting up your invoices to ensure that they meet business reporting requirements. [0]

Which circumstances require an invoice?

The UK invoicing rules apply if the supply of goods or services is taxable in the UK. Businesses are obliged to issue invoices for supplies of goods or services to another business if both parties are registered for VAT purposes. The issuance of invoices is not mandatory for exempt or zero-rated sales. Invoices are typically not required for B2C purchases in the UK.

What does an invoice need to contain?

In the UK, there are three different types of VAT invoices: full, simplified, and modified. A full invoice is the most common form, so when in doubt, please use this format.

Full invoice

In the UK, a full invoice must contain the following information:

  • Unique and sequential invoice number (without gaps)
  • Date on which the invoice is issued
  • Identity of the seller:
    • Full name of an individual entrepreneur / company name
    • Address of the registered office
    • Company registration number (CRN) for incorporated businesses
    • Names of directors (for limited liability companies) do not have to be mentioned. If you decide to put names of your directors on your invoices, you must include the names of all directors.
  • Seller’s VAT identification number
  • Full name and address of the buyer
  • Time of supply (tax point) if it is different from the invoice date
  • Description of the goods or services
  • For each different item listed on the invoice, the following must be shown:
    • Unit price (excluding VAT)
    • Quantity
    • Discounts
    • Total amount payable (excluding VAT)
    • VAT rate (If an item is exempt or zero-rated, make it clear that there is no VAT on these items.)
  • Total invoice amount excluding VAT
  • Total VAT amount
  • Reference to “reverse charge” if the customer must account for VAT under the reverse charge mechanism
  • In the case of self-billing, a reference to “self-billing”
  • An indication of the fact that a margin scheme has been applied
  • VAT identification number of the customer (This is only required for B2B sales of goods from Northern Ireland to EU member states.)

Modified invoice

A modified invoice must contain all the same information as a full VAT invoice, but it should also include the total amount including VAT. Modified invoices are only issued for retail sales exceeding £250.

Simplified fields

A simplified invoice can be issued if the total invoice amount does not exceed £250. The simplified invoice must mention:

  • Unique invoice number that follows on from the last invoice
  • Name and full address of the supplier
  • Supplier’s VAT identification number
  • Time of supply (tax point)
  • Description of the goods or services
  • Total invoice amount including both the taxable amount and the VAT amount
  • VAT rate per item (If an item is exempt or zero-rated, make it clear that there is no VAT on these items.)

What else should I consider while issuing an invoice?

While there are certain elements that an invoice must include, invoices do not need to include a payment due date. Invoices can also be issued in any foreign language or currency.

Payment due date

In the UK, it is not mandatory to include a payment due date on the invoice; however, it is a good practice to do so. If an invoice payment date is not specified, the customer must pay within 30 days from the invoice issue date.

Language

It is not necessary to issue invoices in the English language. If invoices are issued in a foreign language, the business must be able to provide an English translation within 30 days if asked to do so by a visiting VAT officer.

Currency

Invoices can be issued in any currency. If an invoice is issued in a currency other than GBP, the total VAT payable must be mentioned in GBP. Foreign currency must be converted into GBP using either:

  • The period rate of exchange published by HMRC;
  • The UK market selling rate at the time of supply (the rates published in national newspapers are acceptable);
  • Or another rate used for commercial purposes upon HMRC’s approval

When does an invoice need to be issued (timeline)?

An invoice must be issued within 30 days from the time of the supply or the time of payment (if payment occurs before the supply).

Can I leverage electronic invoicing?

Yes, invoices can be issued by electronic means provided that the authenticity of the origin, the integrity of the content, and the legibility of the invoice is ensured. Electronic invoicing is subject to acceptance by the recipient.

How long should an invoice be retained?

Invoices must be retained for six years. The obligation to retain invoices applies to both sales and purchase invoices.

How Stripe can help

Stripe Invoicing is a global invoicing platform built to save you time and get you paid faster. Create and send a Stripe-hosted invoice in minutes from the Dashboard, or use the Invoicing API and advanced features to automate how you collect and reconcile payments.

Invoicing is integrated into the Stripe payments stack, so customers can automatically collect invoice payments with Smart Retries, email reminders, and automatic card updates, and invoice globally from day one.

Easy to get started: Create, customize, and send a Stripe-hosted invoice in minutes—all from the Dashboard, with no code required. You can also type “invoice.new” into any browser URL bar and jump straight to the invoice editor.

Gets you paid faster: Stripe’s online invoices provide an optimized experience across mobile, tablet, and desktop, and they support more than 25 languages and 135 currencies. The hosted invoice page dynamically shows payment methods based on your customer’s location, helping you get paid faster. In fact, most Stripe invoices are paid within three days.

Configurable for any use case: Collect one-time or recurring payments via card, bank transfer, SEPA and BACS direct debit, and other payment methods. Add line items, discounts, and tax rates directly to your invoices.

Scales with you: Stripe’s APIs can help automate your invoicing workflows. Use automatic email reminders and aging reports to collect unpaid invoices, and leverage Smart Retries to retry failed payments at optimized times.

For more information on Stripe Invoicing, read our docs. To start sending invoices and accepting payments right away, reach out to our sales team.

[0] Information is current as of July 1, 2022. Consult with your legal counsel for advice specific to your business.

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