Example VAT Invoice Template for UK Couriers

Following on from my recent post What Details Need to Appear on a VAT Invoice for Courier Services in the UK?  I thought it might be useful to supply an editable invoice template to illustrate exactly what’s needed and to maybe provide a starting point for to enable same day couriers to design their own invoices which meet all the legal and business requirements.

Download the template here (MS Excel template file) or view it as a Read More…

Posted under Accounting Systems, Courier Basics, Courier Business, VAT

Posted by Alec at 11:42 am, August 7, 2008

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What Details Need to Appear on a VAT Invoice for Courier Services in the UK?

There are strict, but thankfully very simple, rules for what needs to appear on a VAT invoice in the UK.

To satisfy HMRC you need to include on your invoice:

The date of issue of the invoice.
A sequential number that uniquely identifies the invoice.

Your business’s name, address and VAT registration number.
The name and address of your customer.
Your customer’s VAT registration number (only if they’re VAT registered in another EU country and you’re invoicing without VAT).
The date of supply of services (the date you did the work).
A description of the services supplied (from a VAT point of view ‘Courier work’ would be OK – your customer may want more detail).
The VAT rate applied (normally 17.5%).
Total amount of VAT payable.
The total amount payable for the whole invoice excluding VAT.
The total amount of VAT charged at each VAT rate (normally just one entry for the 17.5% rate).
The unit price of the services supplied and the number of units charged for – if this is normal practice for your industry (as far as I’m aware it isn’t normal practice in the courier industry) or required by your customer. In practice you can ignore this unless you charge your customer by an agreed price per mile or hour worked AND they’ve asked you to include the figure on your invoice. For example ‘200 miles @ 70p/plm’.

To satisfy Companies House and Trading Standards:

If your business trades under a name other that its actual Read More…

Posted under Accounting Systems, Courier Basics, Courier Business, Courier Financial Issues, Late Payment, VAT

Posted by Alec at 7:32 pm, August 5, 2008

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Claim back the VAT on things bought before VAT registration

When you first register for VAT you’re allowed to claim back the VAT on some of the things you paid VAT on before you became VAT registered. The claim should always be made on your first VAT return. HMRC are ‘allowed’ to let you claim at a later stage but they don’t have to do so.

You must be able to provide receipts showing the VAT for anything that you claim the VAT back on in this way. Be warned that HMRC are very likely to ask to see all the supporting VAT receipts if you put in a big reclaim of VAT on your first VAT return. This is nothing to get worried about as long as you’ve stuck to the rules.

You can claim the VAT back on any ‘goods’ that you’ve purchased up to 3 years before your registration date as long as you still have the goods on the date that your registration starts. ‘Goods’ would include vans, computers, promotional material, uniform, fax, telephones and even the tank full of fuel you bought the night before your registration started.

You can also claim back the VAT on any ‘services’ that you’ve paid for up to 6 months before your registration date as long as the service wasn’t one that you ‘sold on’ before your registration date. So you could claim back the VAT on your accountant’s bill from 5 months ago but you couldn’t claim back the VAT that a subcontractor charged you last week if you’ve invoiced your customer for the job before your registration date.

The good news is that you can still claim back the VAT on these pre-registration expenses even if you’ve registered under the Flat Rate Scheme (FRS).

Normally under the FRS you can only claim back the VAT on purchases of ‘capital assets’ costing over £2,000 including VAT; so as far as couriers are concerned usually just on the purchase of a van. When claiming the VAT on pre-registration expenses however you can claim back the VAT on all the purchases mentioned above as if you weren’t on the FRS. So if you were to buy your new laptop 2 weeks before you registered for VAT on the FRS then you’d still be able to claim the VAT back on it. If you bought it just after registering for VAT on the FRS you wouldn’t be able to claim the VAT unless it had cost you £1702.13 plus VAT (£2,000) or more.

The only ‘gotcha’ with regards to the FRS is that if/when you sell anything that you’ve claimed the full amount of VAT back on using the above method (your van for instance) you have to account for the VAT on the sale at the normal rate rather than at the FRS rate. So if you’ve bought your van 3 years ago for £8,000 (plus £1,400 VAT) and claimed back the VAT, then when you sell it next year for £1,500 (plus £262.50 VAT) you’ll have to pay HMRC the full £262.50 VAT when you sell it, rather than £135 under the FRS.

Given that you’ll almost certainly be within a year or so of starting your courier business when you decide to register for VAT, it’s certainly worth going back and claiming all that you’re entitled to.

Posted under Courier Financial Issues, VAT

Posted by Alec at 7:28 pm, July 8, 2008

I registered my courier business for VAT – what now?

Once you’ve applied to be registered for VAT it can take anything from 2 weeks to 3 months (even longer in certain cases) for you to receive confirmation of your registration and your VAT registration number.

Unless you’ve taken the (sometimes sensible) option of starting your registration on a date in the future you could have a period of 3 months or longer when you’re liable to account for VAT on all your sales but you’re not legally able to charge VAT. This obviously leaves you with a problem.

You’re not legally able to show the VAT as a separate amount on your invoice unless you’ve received confirmation of your VAT registration.  HMRC’s solution is for you to issue a VAT-inclusive invoice to your customers. So instead of invoicing £100 you would invoice £117.50 ‘including VAT’. If you’ve got a close relationship with all of your customers and you can get them to agree to this in advance then this is without doubt the best option: please read on however.

Most established companies, particularly in the transport sector, will not pay VAT on an invoice unless it’s a genuine VAT invoice containing a VAT number and the VAT shown as a separate amount. You are not allowed (or able) to supply these details on your invoices until you receive confirmation of you VAT registration. If you use the HMRC approved method above (invoicing inclusive of VAT), without the prior agreement of your customer, you may well find that your customer delays payment of your entire invoice until they receive a proper VAT receipt.

The alternative method of dealing with this problem is to invoice for the normal amount, say £100 using the example above, with a clear notice on the invoice stating that you are awaiting VAT registration and a full VAT invoice showing the outstanding VAT will be issued as soon as your registration is confirmed. This avoids the delay that will almost inevitably be caused if you issue a VAT-inclusive invoice as recommended by HMRC.

Once your VAT registration is confirmed you send them an invoice for the full amount, with the VAT itemised, with a credit shown for the original amount (if that’s already been paid) and just the VATshowing as outstanding. If you’re ONLY invoicing for the outstanding VAT it can be seen as helpful (or at least ‘friendly’) to show the ‘payment due’ date as the last day of your own VAT quarter.

Remember that you can reclaim the VAT on many expenses incurred BEFORE your registration date. I’ll cover that in a future posting.

Posted under Courier Business, VAT

Posted by Alec at 9:22 pm, July 7, 2008

VAT registration – should I?

I think visit to the accountant is needed here

If you go to the accountant and they tell you not to register then get another accountant.

The only reason to even consider not registering for VAT is if you have a lot of customers that aren’t VAT registered.

Read this http://deliver-it.biz/couriers/2008/03/should-i-be-vat-registered/

Posted under Courier Financial Issues, VAT

Posted by Alec at 4:26 pm, June 26, 2008

Charging VAT while waiting for VAT Registration Number

I guess you’ve received an invoice with VAT on it from someone awaiting registration? Just pay the original amount and tell them that you’ll pay the VAT when you get a proper VAT invoice.

Posted under Courier Financial Issues, VAT

Posted by Alec at 12:48 pm, June 12, 2008

Vat Registration

If you’re subbing out enough work for it to make a difference to you whether your subbies are VAT registered or not how can your turnover possibly be under the VAT registration threshold anyway?

It never fails to amaze me the number of people on here who I KNOW are operating more than one vehicle & driver, yet there’s no VAT on the invoice when it arrives. How can you possibly run more than one vehicle and turn over less than £1300 per week? Even if your turnover is that low WHY would you want to pay two lots of running costs without claiming back the VAT?

Something I prepared last time this question came up: Should I be VAT Registered?

Posted under VAT

Posted by Alec at 8:53 am, April 8, 2008

VAT – FRS or Cash Accounting?

They’re not mutually exclusive. You can operate the FRS on a cash basis or an accrual basis.

Posted under VAT

Posted by Alec at 6:07 pm, March 13, 2008