Your business recently switched to electronic invoicing. There were a few teething problems but it’s now working well. However, some customers are asking for paper invoices and getting pushy about it. Must you comply with their requests?
While the design and layout of your business invoices is up to you, there are government regulations that require you to include certain information about your business and the goods or services you sell. If you’re registered for VAT you’re required to include even more information on your invoices.
Northern Ireland. If your business is based in Northern Ireland, and you issue sales invoices to EU customers for goods, you must comply with additional invoicing requirements because Northern Ireland is part of the EU’s single market for trading in goods.
Electronic or paper
For most businesses there are financial advantages to sending electronicinvoices compared with paper equivalents, e.g. no enveloping and postage costs. Further advantages include the facility to link electronic invoicing with your bookkeeping software so that details of your sales can be transferred to your bookkeeping software automatically, so it’s quicker and more accurate compared with manual invoices.
Many small businesses and private customers prefer to receive paper invoices and may request them instead of electronic. Customers can ask but cannot insist on the format in which you send them. Like their design, the choice of format is entirely up to you.
Tip. If a customer complains about receiving electronic invoices , point them towards HMRC’s guidance.
You can’t have it both ways
Issuing both paper and electronic invoices for the same sale is not allowed. If you issue both, the rules say that the electronic version is the legal document for VAT purposes.
Tip. HMRC’s guidance on invoicing says that there is no problem issuing both electronic and paper invoices for a “controlled trial of electronic invoicing systems”. But the dual invoicing must stop at the end of the trial.
Tip. Where you’ve fully switched to electronic invoicing you can, in addition, provide a customer with a paper document showing all the invoice details but it should also clearly state: “this is not a VAT invoice”.
Making the change
Many bookkeeping software applications include integrated electronic invoicing facilities, or they can be added for an extra cost. You’re not required to notify HMRC or anyone else that you intend to switch from paper to electronic invoicing or vice versa. However, when you’ve made the change you must be able to prove to HMRC that your system is reliable and provides an electronic audit trail between your invoices and your VAT returns.
It’s entirely up to you what format you use for sending invoices. Customers can make requests but cannot insist on the format. You must use either electronic or paper invoices; you can’t mix and match or issue both.
This article has been reproduced by kind permission of Indicator – FL Memo Ltd. For details of their tax-saving products please visit www.indicator-flm.co.uk or call 01233 653500.