VAT invoices: details required

How much information is required to be included on an invoice for it to qualify as a VAT invoice entitling the recipient to input VAT for the purposes of the VAT Regulations 1995 reg 14(1)? In Fount Construction Ltd v HMRC [2024] UKFTT 00340, the FTT has held that a brief description sufficient to enable identification of the essentials of the supply will normally be sufficient and it does not have to definitively identify the supply with sufficient precision to answer any queries as to liability that HMRC might have.

Background

In this case, HMRC rejected a claim for input VAT recovery by Fount Construction on the basis that the invoices it held did not meet the requirements of regulation 14. Regulation 14(1) provides "a registered person providing a VAT invoice in accordance with regulation 13 shall state thereon the following particulars... (g) a description sufficient to identify the goods or services supplied".

In this case, the invoices held by Fount Construction contained the single description "Building Works at the above". The invoices contained a box entitled "Job address" containing the address for the building site in question. The invoices set out that VAT was calculated at the standard rate and included a VAT exclusive subtotal, the VAT amount, and the overall total.

HMRC argued that they needed to be able to verify that the details on the invoices were correct, that the VAT had a business purpose and was charged at the correct rate. HMRC suggested that the description was insufficient as it did not allow HMRC to assess the liability or determine the rate of VAT due. Fount Construction contended that an invoice can have a simple description and 'did not need a novel' in order for it to be valid.

FTT decision

The FTT has rejected HMRC's suggestion that the invoice description needs to be in such detail as to enable HMRC to draw definitive views on the VAT treatment of the supply from the invoice alone. HMRC have wide-ranging powers to seek further information in relation to the supply, and to refuse recovery of input tax if such information is not supplied. "The invoice is the gateway into any enquiries by HMRC, rather than a repository for the answers to any questions that might be asked."

The FTT referred to the earlier decision in Deadoc Construction Limited v HMRC [2015] UKFTT 0433, which also considered the amount of detail required by an invoice to comply with regulation 14. Agreeing with the conclusions in that case, the FTT held that a general short description of the nature of the services (such as "Building Services"), along with some further identifying information such as the name of the site, the contract, or the date of works, will be sufficient to meet the requirements of regulation 14.

The FTT noted that, for the purposes of deciding this case, it did not need to take a view on whether a short description would be sufficient in the absence of further identifying information. However, it endorsed the view of the FTT in Deadoc that it will very much depend on the context. It is worth noting that in that earlier case, invoices which simply stated "supply of labour, plant and material" but which did not include the name of a site or contract, nor stipulate what period was covered by the invoice, nor any other identifying Information were held not to be compliant with regulation 14.

Comment

The decision is a useful reminder of the requirements necessary to ensure that an invoice qualifies as a valid VAT invoice. Of course, whilst the invoice in this case was held to be valid, that did not mean that it was not open to HMRC to query the validity of the claim for input VAT via the normal enquiry process.