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CATEGORY - VAT

ELECTRONIC INVOICES

It is common now for invoices to be e-mailed to customers rather than sent through the post. This does not prevent them from being proper VAT invoices provided they include the same information as paper VAT invoices and your systems and procedures meet all the necessary requirements. You do not need to inform the Revenue that you are invoicing electronically. Nor do you have to use any special method of transmission - an attachment to an e-mail will do. However, you must make sure that what you send to your customer is what they receive. In particular, you will need to ensure that your electronic invoices are:

  • complete and accurate
  • sent out when they should be
  • not accidentally duplicated or processed more than once
  • not corrupted by malfunctioning software or computer viruses
  • identifiable and easily retrievable from your computer systems
  • not used by your client to claim input tax when they shouldn't be

Further problems may arise if someone else issues your invoices on your behalf. If you outsource your invoicing, you remain legally responsible for their accuracy, completeness, security and despatch. You should make it a condition of your outsourcing agreement that all the security, storage, content and record-keeping requirements are met, and check that this is actually the case in practice.

Unfortunately not all countries are as relaxed about electronic invoicing as the UK. Although e-invoices were accepted as valid VAT documents by all EU member states in 2004, the detail of legislation varies from country to country and some are far stricter than others. For example, some require e-invoices to be digitally signed or electronically archived. There are also penalties for non-compliance in some countries. In the UK the worst that can happen is that your customer loses the ability to claim input tax, but in Ireland an organisation can be fined €1,520 for each non-compliant invoice, whilst in Sweden you can go to prison for 2 years!

You therefore need to be very careful about sending electronic invoices to customers in other countries. However, it is where the supplier is based that counts, so if you are based in the UK and your customers are in another EU country you only need to meet the UK conditions. Notwithstanding this, they may not be accepted for input tax purposes by the tax authorities in other countries, so you should check with your customer that your e-invoices are acceptable and send paper invoices instead if they are not. If your customer belongs in a non-EU country, you should always check with the tax authorities there that e-invoices are acceptable.

Finally, you are not allowed to issue both paper invoices and e-invoices for the same transactions. You must choose one method or the other. The only exception is if you are running a controlled test on electronic invoicing for a limited period such as a parallel run.


Acumen Tax Solutions
2 Purley Bury Avenue, Purley Oaks, Surrey CR8 1JB
Tel: 020 3669 5270 Mobile: 07813 582890 E-mail: info@acumentaxsolutions.co.uk

For information of users: Although every care has been taken in compiling this material, it only provides an overview and does not take the place of an individual consultation. We strongly advise all users to consult the detailed legislation or seek professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or this firm.

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