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Value-addec trouble
Page 37
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New laws on VAT and electronic invoicing are being implemented on 1 January 2004. Steve James looks at how it will affect your business
From 1 January 2004, new rules come into effect regarding VAT invoices and electronic invoicing. EU member states have agreed to implement the sexily titled EC Invoicing Directive (SI 2002/115/EC) which changes the contents of VAT invoices, rules for electronic invoicing and the translation of invoices: • The type of supply is no longer required (eg transport of 20 pallets from A to B) • VAT no longer has to be shown at differing rates • I he unit price (eg cost per load) must be shown for supplies of both goods and services • The requirement to show a sterling equiva lent of the total invoice amount is removed — but remains for the individual supplies (eg deliveries) and for the total amount of VAT.
Customs is reasonably relaxed about the items which need to be removed (1, 2 and 4 above) and will allow businesses to continue to include these on UK VAT invoices for the immediate future.
However. Customs is required to ensure that the unit price is included. The unit price applies to goods and services. For goods, the point is straightforward, and for services Customs expects to see some reference to an 'hourly rate' or 'rate for the job' to address the issue. Therefore the legal requirements for a UK VAT invoice from 1 January 2004 are as follows: (a) An identifying number (b) The time of supply (c)The date of issue of the document (d)The name, address and registration number of the supplier (e) The name and address of the person to whom the goods or services are supplied (f) This requirement (type of supply) has been removed (g) A description sufficient to identify the goods or services supplied (h) For each description, the quantity of goods or the extent of the services, and the rate of the VAT and the amount payable, ex-VAT, expressed in sterling (eg for the delivery of frozen peas from A to B at 17.5% VAT) (i) The gross total amount payable, excluding VAT (j)The rate of any cash discount offered (k)This requirement which related to each separate rate of VAT charged on an invoice has been removed (1) The total amount of VAT chargeable, expressed in sterling (m)The unit price The customer's VAT registration number must be shown on invoices which are provided to a VAT-registered person in another member state, and the supplier must show the VAT registration number, including the country code of the recipient of the goods or services.
Electronic invoicing
Two methods of electronic transmission of invoices come into play: advanced electronic signatures and electronic data interchange (ED!). Member states are also allowed to accept other electronic means.
Customs wants to encourage invoicing by electronic means. The difficulty arises v electronic invoicing is used across bor particularly for intra-EU sales. It is then ni sary for the supplier and/or customer to en that the methodology proposed is accept in both the member state of supply anc member state of receipt.
Because of the complexities and issue lating to the development of the systems revenue authorities are allowed to cont requiring notification of the use of electr invoicing at least until 31 December Customs require businesses which comm electronic invoicing for supplies made 1 January 2004 to notify them within 30 da: