If you do not clearly state in your invoices what goods or services were supplied, HMRC will now block the recovery of VAT. We have heard that HMRC officers are using this power to query the validity of invoices, particularly for businesses in the construction sector and from employment agencies.

For those who supply labour or staff to customers, the customer will rightly be frustrated if HMRC says that the business is not able to reclaim VAT because your invoice description was not detailed enough. For this reason, it is vital to ensure that you include the correct information in these invoices.

What Should Your VAT Invoice Include?

An invoice of labour should include the following as a minimum:

  • The number of workers
  • The number of hours (or days) worked
  • The dates of the work
  • The site address where the workers were supplied
  • The nature of the work undertaken (this can be provided through cross-referencing other documents such as timesheets that clearly show the workers’ names or supporting schedules)

With this in mind, it is highly recommended to populate your invoices with more detail and cross-reference to contracts and timesheets where possible. This will not only ensure that HMRC does not raise any questions but also maintain a good relationship with your customers.