Managing VAT on Contractor Invoices

19 Jul 2023

Entrust has identified a recurring problem concerning some contractors charging Value Added Tax (VAT) on their invoices, despite not being VAT registered with HMRC.

We therefore urge all Environmental Bodies (EBs) to ensure that invoices featuring VAT charges also display the contractor's VAT registration number. Invoices that carry VAT but lack a registration number should not be settled and should be returned to the contractor for further clarification.

If you have any doubts regarding the validity of a VAT number on an invoice, you can confirm its authenticity via this link:

Many organisations offer guidance on what information should be provided on an invoice. We've shared a brief summary of the essential points below, but EBs may wish to conduct additional checks if any invoices or contractors raise concerns before making payments.

1. HMRC VAT Guide (VAT Notice 700) stipulates that VAT invoices should include:

  • A unique sequential number
  • The supply time (tax point)
  • The issue date of the document (if different from the supply time)
  • The supplier's name, address, and VAT registration number—suppliers may issue invoices under a trading name, but they must show the name and address under which they're registered for VAT somewhere on the document
  • The customer's name and address
  • A detailed description of the goods or services provided 
  • The quantity of goods or service extent, VAT rate, and payable amount (excluding VAT)
  • The total payable amount (excluding VAT)
  • The cash discount rate offered
  • The total VAT chargeable (expressed in sterling)
  • The unit price (read paragraph 16.3.2).

2. Charity Commission specifies that your invoice must contain:

  • A unique identification number
  • Your company's name, address, and contact details
  • The name and address of the invoiced customer
  • A clear description of what you're charging for
  • The date of goods or service provision
  • The invoice date  
  • The charged amount(s)
  • VAT amount if applicable
  • The total amount owed
  • For sole traders: Your name, any used business name, and an address for receiving legal documents
  • For limited companies: The full company name as appears on the certificate of incorporation.

Remember, it's essential to verify all these details before making payments to contractors. We urge additional caution and checks as required before making any payments.

And finally, we are excited to annouce that we're in the process of organising a due diligence training session set to take place in October. The exact date will be announced in the near future.