Quick Answer
A VAT invoice is a legal tax document that lets a VAT-registered business charge VAT and lets the buyer reclaim it. A full UK VAT invoice must show a unique sequential number, the issue date, the tax point, both parties' names and addresses, the seller's VAT number, a clear description, the VAT rate on each line, and the totals: net, VAT, and gross. At the standard rate of 20%, £1,000.00 net plus £200.00 VAT makes £1,200.00. For business customers overseas, UK VAT is generally not charged, and the invoice states that the supply is outside the scope of UK VAT or subject to the reverse charge. The generator above builds all of this for you in your browser, with no sign-up.
1. What Makes an Invoice a Legal "VAT Invoice"?
Most freelancers and small businesses treat an invoice as a request for payment. For a VAT-registered business, it is also a tax document. The VAT invoice does two jobs at once:
- It lets the seller charge VAT on a sale and account for it to the tax authority.
- It lets the buyer, if VAT-registered, reclaim that VAT as input tax. Without a valid VAT invoice, a buyer generally cannot recover VAT on the purchase, and an error on your invoice can cost your customer real money.
HMRC VAT Notice 700 (The VAT Guide), Section 16: A VAT-registered business must issue a VAT invoice when it makes a taxable supply to another VAT-registered person, and must provide the particulars the law requires.
Three types of VAT invoice
| Type | When it is used | What it contains |
|---|---|---|
| Full VAT invoice | Standard B2B sales, and any sale where the customer is VAT-registered and wants to reclaim | Every particular in Section 2 |
| Simplified VAT invoice | Retail sales of £250 or less including VAT. | Seller's name, VAT number; date; description; the total including VAT; and the VAT rate for each rate applied. No customer details. |
| Modified VAT invoice | Retail supplies over £250 including VAT to a VAT-registered customer. | The particulars of a full invoice, but it may show tax-inclusive prices. |
2. The Mandatory VAT Invoice Requirements Checklist (HMRC & EU)
These are the VAT invoice requirements for a full UK VAT invoice under Notice 700, mapped to the equivalent list in the EU VAT Directive.
Directive 2006/112/EC, Article 226: Sets out the mandatory details on invoices issued under the Directive, including the date, a sequential number, VAT identification numbers, names and addresses, description, taxable amount per rate, rate of VAT, and the VAT amount payable.
The checklist
- Unique, sequential invoice number. Based on one or more series, with no gaps or duplicates (Art. 226(2)).
- Date of issue. The date you create and issue the invoice (Art. 226(1)).
- Tax point (time of supply). The date the supply takes place, if different from the invoice date (Art. 226(7)).
- Seller's name, address, and VAT registration number. A UK number looks like GB123456789 (Art. 226(3) and (5)).
- Buyer's name and address. The customer's trading or business name and address (Art. 226(5)).
- Clear description of the goods or services. Enough to identify what was supplied, with quantity and nature (Art. 226(6)).
- Unit price excluding VAT for each line (Art. 226(8)).
- Rate of VAT applied to each line (20%, 5%, or 0%) (Art. 226(9)).
- Total amount payable excluding VAT, with a breakdown for each VAT rate.
- Total VAT amount, shown for each rate and in total (Art. 226(10)).
- Grand total payable including VAT.
3. The Cross-Border "Reverse Charge" Mechanism
The rules for cross-border services turn on one question: where is the supply made? For B2B services, the general rule puts it where the customer is, not where you are.
Value Added Tax Act 1994, section 7A: Where services are supplied to a person who is a "relevant business person", the place of supply is where the recipient belongs. This is the B2B general rule.
The effect: a UK freelancer who sells a service to a business customer in Germany, France, or the USA is making a supply that takes place outside the UK. UK VAT is not charged. In the EU, the customer accounts for the VAT in their own country under the reverse charge, as both a payable and a reclaimable amount on the same return.
What to write on the invoice
On a UK-to-EU or UK-to-USA B2B service invoice, you should include:
- 0% VAT charged (no UK VAT on the invoice).
- The customer's VAT number (EU customers) or their business details (USA customers).
- A statement of the basis, for example: "Reverse charge: customer to account for VAT to the local tax authority."
4. Zero-Rated vs. Exempt vs. Outside the Scope
These three terms are used interchangeably online and mean different things for your tax position. The UK has three rates: standard 20%, reduced 5%, and zero 0%.
- Zero-rated: Taxable, but at 0% (e.g., books, children's clothes). Must be on the VAT return. You can reclaim input VAT.
- Exempt: Non-taxable (e.g., insurance, education). You cannot reclaim input VAT on related costs.
- Outside the scope: Transactions not covered by the VAT system (e.g., B2B services to the USA).
5. Deep, Exhaustive FAQ
Can I issue a VAT invoice if I am not VAT registered?
Absolutely not. Only a VAT-registered business may charge VAT or show a VAT registration number on an invoice. Charging VAT when you are not registered is an offence, and HMRC can require you to pay over what you collected. It also leaves your customer with a document that does not support a valid reclaim.
How do I show a VAT breakdown on an invoice with mixed rates?
Put the VAT rate on every line, and then add a summary by rate below the lines. Each rate is totalled separately (e.g., 20% Total, 5% Total), followed by the grand totals. The generator tool above does this automatically.
Do I need to show the customer's VAT number?
For EU reverse-charge invoices, the supplier must show the customer's VAT identification number (Directive 2006/112/EC Article 226(4)). For UK domestic B2B invoices it is not a legal requirement, but it is highly recommended.
Can I issue VAT invoices in a foreign currency?
Yes. You can invoice in euros, US dollars, or any other currency. However, in the UK you must also show the total VAT payable translated into sterling and state the exchange rate used.
Santanu Sarma
Economics Researcher & Creator of GetInvoicePDF.com
Santanu specializes in public finance and econometrics, holding an Economics Honors from Bhattadev University. He builds high-precision financial models and calculators to help independent professionals optimize tax compliance. The VAT generator enforces legal tax frameworks entirely client-side, ensuring absolute data privacy.
Primary sources used in this guide
- HMRC VAT Notice 700, The VAT Guide (Section 16, VAT invoices)
- Value Added Tax Act 1994 (including section 7A, place of supply of services)
- Council Directive 2006/112/EC on the common system of value added tax