Under EU rules, all member states including the UK have to make some changes to their current requirements for issuing sales invoices. The aim of the changes is said to be to simplify and remove administrative burdens on businesses, to help promote the use of electronic invoicing and to move further towards having the same invoicing requirements across EU member states. As anyone with VAT registrations across the EU will know, the current differences in invoicing rules are not helpful and non-compliance with local requirements can prove quite costly.
The changes have to be implemented by 1st January 2013 and in the UK, HMRC is open to feedback from interested parties between now and 12th July. Yes, HMRC is once again consulting before it introduces VAT changes! The consultation means that the changes summarised below will be confirmed later in the summer but HMRC has stated that 1st January 2013 will indeed be our implementation date. The planned changes include the following:
Electronic invoicing. The relaxation in some EU states of the conditions for using electronic invoicing so that they can no longer dictate the method that is used for electronic invoices. From January 2013 the only mandatory condition for electronic invoicing across the EU should be that the customer has agreed to it.
VAT exempt supplies. UK VAT law does not require that invoices are issued for VAT exempt supplies, for example certain financial transactions. However, UK businesses involved in cross-border exempt supplies have often been pressured by their customers to issue invoices because of different rules in the customer’s member state. From January 2013, the requirement to issue VAT invoices for exempt transactions will be removed across the EU.
Simplified VAT invoices for supplies up to £250. In the UK we already have simplified rules for retailers selling goods up to £250 in value. From 1st January next year, all businesses will be able to issue less-detailed sales invoices for supplies up to £250. The reduced information required on such invoices will be the name, address and VAT registration number of the supplier, the time of supply, a sufficient description of the goods or services, the total amount payable including VAT and for each VAT rate chargeable, the VAT inclusive amount and the VAT rate.
Reference on an invoice to explain the VAT treatment. If you are involved in making supplies that require you to explain the VAT treatment on the invoice, for example if you are using a margin scheme, self-billing or making a cross-border supply that requires the customer to account for a VAT reverse-charge, currently you may refer to national VAT law, EU VAT law or use some other wording on the invoice. To avoid ambiguity, from January each member state will stipulate the wording that everyone must use. For example, for reverse charge supplies the UK reference is likely to be “reverse charge”.
Time limit for issuing an invoice for an EU supply. At the moment the time limit varies across the EU but from 1st January 2013 in all member states the time limit for issuing a VAT invoice following a supply of goods or services will be the 15th of the following month.
We will of course update you of the finalised changes in a later newsletter but in the meantime please do let us know if you have any concerns or comments. We would be happy to pass them on to HMRC.