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VAT registered businesses should use sequential invoice numbers

October 9, 2008

From 1st October 2007, new VAT invoicing regulations came into play which some small companies may not be aware of. From this date, all invoices issued should use an identifying number that is unique and sequential.

Before this date, there was an existing requirement for all VAT invoices to have an identifying number, but now businesses should be aware that they need to comply with the more precise requirements.

Although HMRC said they were very unlikely to issue penalties for non-compliance with the new rules for the first year, that period is now over.

Here are some notes, based on HMRC FAQs, which cover some of the main points on the new sequential numbering rules:

Frequently Asked Questions

  • An invoice number must form part of a logical, sequential and unique series – it can be made up of purely numbers, of a mixture of letters and numbers.
  • You can start the invoice sequence from any number (or letter / number combination) you want. So, you don’t have to start from No.1, if you want to give the impression that you’ve not just started up in business.
  • You can use unique codes for each customer if you wish, as long as the series remains unique and sequential.
  • You can also run more than one invoice sequence at the same time, for example if you want to have a separate sequence for each customer you have.
  • If your business has several divisions or units, each unit can have its own unique sequence of invoice numbers.
  • If an invoice is ‘spoiled’, or cancelled for whatever reason, just keep the spoiled invoice for your records in order to justify any break in the sequence.