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Invoice Types and Requirements in England

An invoice is an important financial document that simplifies the procurement process in the world of business. It allows for easy documentation of business transactions. In simple terms, an invoice is a financial document that requests the payment of supplied goods or services from a seller to a buyer.

In England, a copy of an invoice must be given to the buyer and the tax authority. It serves as proof of revenue and gives a breakdown of taxes to be paid. However, for an invoice to be valid within England, it must possess the minimum requirements stated below.

  • The name, address, and invoice number of the supplier (invoice creator).
  • The name and address of the client.
  • The detailed description of products or services supplied.
  • A breakdown of cost, subtotal, total, and taxes.
  • The supplier’s payment details.

Each of these requirements must be fulfilled for an invoice to be valid in England. However, a few exceptions may exist.

Part of the conditions for the legality of an invoice is making payment when due. However, payments are not always made when required. The following steps can be taken to mitigate this issue.

  • The due payment of goods or services on an invoice should not be too long. It should not exceed 2 months to prevent unnecessary delay.
  • If a buyer refuses to pay when due, the seller should follow up with an overdue payment document.
  • An invoice should be sent to the buyer as soon as the goods or services are supplied.

Some of the most commonly used invoices in England are discussed below.

Purchase Invoice

A purchase invoice is a financial document issued by a supplier to notify a buyer that goods or services have been delivered. It also specifies that payment is required. The purchase invoice is usually developed based on the earlier received purchase order.

Sales Invoice

The purchase invoice is similar to a sales invoice. The document is referred to as the sales invoice from the perspective of the seller.

Tax Invoice

A tax invoice is a type of invoice that specifies the amount of payable tax. It is created and sent by a registered dealer of goods or services. Once created, a copy of the tax invoice is sent to the buyer. A typical tax invoice contains quantity, cost, description, and percentage tax of goods or services. A tax invoice is needed for tax credit collection.

Commercial invoice

A commercial invoice is mostly used in foreign trade. It is used to clear goods at the port of entry or exit. Once presented at the customs desk, the invoice allows for the declaration of goods. A standard commercial invoice must contain all the invoice requirements stated earlier.

The customs office at the border uses the commercial invoice to calculate taxes and tariffs to be paid for the goods passing through.

Pro forma Invoice

Unlike other types of invoices, a pro forma invoice is not seen as a legal document. It is mostly made at the request of a buyer. It is used for the buyer to estimate the custom duty due for goods before being purchased.

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