1. When you need an invoice
An invoice is a request for payment, not proof that payment has already happened. GOV.UK states that an invoice is legally required for a business-to-business transaction where both seller and customer are VAT registered. Businesses also use invoices more widely as a practical record and payment request.
2. Information a normal invoice should contain
Current GOV.UK guidance lists core information including a unique identifier, supplier and customer details, a clear description, supply date, invoice date, amounts, applicable VAT and the total owed.
- Unique invoice identification or number
- Your business name, address and contact information
- Customer business name and address
- Clear description of goods or services
- Supply date and invoice date
- Amounts charged, applicable VAT and total owed
3. Additional details for sole traders
GOV.UK says a sole-trader invoice should include your own name and any business name you use. If you use a business name, include an address where legal documents can be delivered to you.
4. VAT-registered businesses
VAT invoices carry additional rules. GOV.UK says VAT invoices must be used where both you and your customer are VAT registered. Full, simplified and modified VAT invoices can require different information, so check the current guidance that applies to the transaction.
Do not present a standard invoice template as proof that every VAT requirement has been met.
5. Itemise the work clearly
Describe the supplied work so the customer can connect the invoice to the job. Useful line items can show quantities, rates or stages without becoming an internal cost sheet.
6. Invoice dates and due dates
Keep the supply date and invoice date distinct where they differ. State an agreed due date or payment terms clearly so both sides can see when payment is expected.
7. Send and retain the invoice
Send a readable copy to the agreed contact and retain the version issued. If a correction is needed, preserve a clear audit trail rather than silently changing the original document.
8. Record payment and outstanding balances
Record each payment against the correct invoice, including partial payments. The remaining balance should be understandable without recalculating from bank statements each time.
9. Keep invoice records
Invoices and supporting evidence can form part of the business records needed for tax and accounting purposes. Follow current HMRC retention guidance and any additional rules that apply to VAT or employing people.
10. When an invoice remains unpaid
Keep the due date, balance and communication history visible. An overdue marker is an organisational prompt; the business still decides how and when to follow up.
11. Sole-trader invoice checklist
Practical checklist
- Unique invoice number is present
- Your name, trading name and appropriate address are correct
- Customer details are correct
- Work description and amounts are clear
- Supply date, invoice date and due date are checked
- VAT treatment is appropriate for your status and transaction
- Total owed is correct
- Issued invoice and later payments will be retained