Invoices/Receipts

[GGN2001]

Please can anyone clarify if it is a legal requirement to issue any particular sales documentation (e.g. invoices/receipts) to internet-based buyers if you are not VAT registered and are sole trading?

 

[Scalloway]

There is no legal requirement.

 

[pentel]

Why would you not want to do this?

When making your tax return you would need to be able to prove that you have incurred expenses, made much easier with supporting documentation ( invoices and receipts). Why make it difficult for your customers?

 

[GGN2001]

Why would you not want to do this?

When making your tax return you would need to be able to prove that you have incurred expenses, made much easier with supporting documentation ( invoices and receipts). Why make it difficult for your customers?

I mainly transact through Paypal, so buyers will get 'receipts' (of a fashion) for anything they buy from me through that. I was mainly concerned if there was any legal requirement to make formal receipts/invoices, and if they needed to follow any format other than the one produced automatically by Paypal.

On that subject, I also buy things for the business using Paypal, and am often not provided with any formal invoice/receipt by my suppliers. Would it be sufficient for HMRC to show the 'Receipt for your purchase' emails from Paypal in the event of an inquiry? What is the standard of evidence needed for purchases?

 

[Scalloway]

The main test for a business purchase is that it is wholly and exclusively for the business. So I would expect any receipt to detail what you are purchasing so that test is met. It also depends on the value of the transaction. Several payments of a few pounds wouldn't need much back up but the purchase of a machine for several hundred pounds would need more evidence.

 

[pentel]

There is also the matter of VAT reclaim when making business purchases.

 

[Nochexman]

Please can anyone clarify if it is a legal requirement to issue any particular sales documentation (e.g. invoices/receipts) to internet-based buyers if you are not VAT registered and are sole trading?

No, you are OK to proceed. The thing you need to be aware of is if you get into a dispute with someone then being able to point to a receipt that spells out specifically what is being bought / sold might help you out. If there isn't one then it might be case of your word against theirs. Look upon a receipt as one small line of protection for you.

 

[GGN2001]

The main test for a business purchase is that it is wholly and exclusively for the business. So I would expect any receipt to detail what you are purchasing so that test is met. It also depends on the value of the transaction. Several payments of a few pounds wouldn't need much back up but the purchase of a machine for several hundred pounds would need more evidence.

The Paypal receipt emails show the price paid and the title of the listing, which usually amounts to a short description of the item being purchased. Could this be enough evidence for a purchase of several hundred pounds?

 

[Scalloway]

I would include a screenshot of the listing to give a few more details.

 

[DontAsk]

There is also the matter of VAT reclaim when making business purchases.

Which the OP cannot do.

 

[GGN2001]

Been thinking this through a bit more and I've decided I am going to issue invoices in future for customers' convenience.

The guidelines I've read for contents of the invoice seem quite easy to meet with Ebay's invoice generation tool, except for this element:

"the date the goods or service were provided (supply date)"

The invoices I would be issuing are for goods that have already been paid with Paypal and are about to be posted out, so I'm not sure what I would put for this. The generation tool only automatically puts in an invoice date (i.e. the date the invoice was generated) and it is likely to be difficult to edit in another date detailing the above.

Can anyone advise how to deal with this?

 

[Nochexman]

What you are describing are not invoices they are receipts.

 

[GGN2001]

I would be generating what the Ebay system describes as an invoice, and the templates in question have 'Invoice' written on them with a unique reference number. Even though they are being generated after payment, is this not still an invoice?

To clarify, the document I'm aiming for is not supposed to commemorate the payment (Paypal sends out automatic email receipts for that), but rather the transaction as a whole.

 

[Nochexman]

Interesting. Presumably the eBay 'invoice' actually says that the payment has already been received?

 

[GGN2001]

That's the part that is missing from it - it has the seller's name/business name/address, and the same for the buyer, and it states the item being purchased and the amount being charged, and it has 'Invoice [number]', and (if required) you can have VAT information on there too.

I have to admit part of this is that I have been spooked a bit by reading some resources that appear to say (in places) that invoicing is mandatory in Europe for all business transactions (even if you're not VAT registered). For example this from the ec.europa website (sorry had to truncate the link because it wouldn't let me post otherwise):

taxation_customs/business/vat/eu-vat-rules-topic/vat-invoicing-rules_en

Which initially appears to be about VAT, but the statements made after seem broader in scope. On the other hand, I've read some resources that say you don't need to invoice if you're not VAT registered. Because of the doubt, I'm considering a 'cover all bases' approach.

 

[wayzgoose]

When I think back a few decades when I had a printing company and the lengths we went to to make sure everyone's invoices were spot on with the legal requirements, compared to today's offerings I think HMRC have become very lax in that direction. One of our suppliers (a multi million pound company) sends what I would call a statement at the end of each month and then attaches a csv or xml file with the details. Looks highly irregular to me !

 

[GGN2001]

I think this is one of the documents I read that brought doubt in:

[rocketlawyer uk website] /article/invoicing.rl

In which it is said in the first paragraph:

"Invoices help to protect your business’ cash flows, maintain records and fulfil your tax obligations. You must issue invoices promptly in order to avoid any delay in the customer making payment.
It is the legal obligation of the seller to invoice the customer once the product is sold or the services are provided."

Is this an incorrect statement? Sorry to continue to bang on about this but I really want to get my procedure nailed down for the new tax year in a few days. I'd rather just do packing notes if I don't have to invoice.

 

[Scalloway]

Does your local pub issue with an invoice each time you buy a pint?

You need to have enough information to prove that you are recording all your sales and paying tax on your profit. The publican in your local pub has a till roll that forms part of the evidence for his sales and you get information from Amazon.

 

[Taobao agent]

I don't think that it is legal if you sell the product without VAT.

 

[Scalloway]

I don't think that it is legal if you sell the product without VAT.

It is legal to sell products in the UK without charging VAT if the business has a turnover of less than £85,000 per annum.

 

[DontAsk]

I don't think that it is legal if you sell the product without VAT.

A quick Google search, rather than thinking, will put you right on that. The OP stated in their first post that they are not VAT regostered.

 

[paulears]

The VAT thing doesn't really matter. You generate a receipt with or without the VAT number on it as appropriate if PAYPAL haven't done it for you. Lots of people who are VAT registered don't have issues with this either. I generate an invoice for each sale. I tell people they can have a VAT receipt on request and I send them a pdf. So far this year, I've done two!