An invoice is the document HMRC, your buyer and your bank all rely on. This guide covers what a UK farm's VAT invoice and simplified invoice must show, how credit notes work, and what you can charge when a buyer pays late.
A VAT-registered farm must give another VAT-registered business a VAT invoice for standard-rated or reduced-rated supplies, normally within 30 days of the tax point. It needs a sequential number, dates, your name, address and VAT number, the customer's name and address, a description, quantities, VAT rates and totals. Supplies of £250 or less can use a simplified invoice if the customer agrees. Zero-rated sales need no VAT invoice. Late payers can be charged statutory interest of 8% plus the Bank of England base rate and fixed compensation of £40, £70 or £100.
HMRC's VAT guide says that whenever you supply standard-rated or reduced-rated goods or services to another VAT-registered person, you must give that person a VAT invoice. Your customer needs it as evidence to reclaim the VAT. You need not issue one to a customer who is not VAT registered, but you usually cannot tell, so in practice you issue one to anyone who asks.
The time limit is tight. Unless an earlier invoice has already created a tax point, you must normally issue a VAT invoice within 30 days of the tax point arising, which is the time of supply, usually delivery or completion. You can extend the 30 days without asking HMRC in a few cases, such as waiting for invoices from your own suppliers or subcontractors.
The usual trap on a farm is batching. Contractor work done in March and invoiced in May is late, and the customer cannot reclaim until they hold the document. Whether you must register at all is in our guide to the farm VAT registration threshold.
HMRC lists the details that must be shown on any VAT invoice you issue:
The unit price may not be needed if it is not normally provided in your sector or required by the customer. If one invoice mixes standard-rated and zero-rated lines, the zero-rated items must show clearly that no VAT is payable, with a separate total. Separate invoices are simpler. Our farm bookkeeping and HMRC records guide covers the rest of the paper trail.
A simplified, or less detailed, invoice is allowed when the value of the supply is £250 or less and your customer agrees. It must show your name, address and VAT registration number, the time of supply, a description identifying the goods or services, and for each VAT rate the total payable including VAT and the rate. If a retail transaction is over £250, or the customer asks, you must issue a full VAT invoice.
A farm on the Agricultural Flat Rate Scheme has its own rules. HMRC says you must issue invoices if you charge the flat rate addition to VAT-registered customers, because they will need invoices to claim back the addition. The invoice shows a number, your flat rate certificate number, your name and address, the customer's name and address, the date, a description, the price excluding the addition, and the rate and amount of the addition. Use the certificate number, not a VAT number.
The scheme itself is explained in our flat rate scheme guide.
Most livestock sales are zero-rated. HMRC's animals notice says live animals yielding or producing food for human consumption qualify. HMRC's guide says you do not have to issue VAT invoices for zero-rated supplies, and an invoice for one is not a VAT invoice, though you must still record zero-rated supplies in your VAT records.
So issue a plain sales invoice anyway: a number, the date, buyer, description, number of head and price, with tag numbers or a batch reference if that helps. That is my advice, not a rule, but your accountant will want it.
If your buyer prepares the invoice for you, that is self-billing. HMRC says it needs a written agreement, and you must not issue your own sales invoices for transactions it covers.
For flat rate farmers selling through an auctioneer, HMRC's notice says the position depends on whether the auctioneer acts in their own name under the Auctioneers' Scheme or Margin Scheme, so check your sale note with the auctioneer. For contract finishing, a fee for rearing someone else's animals is payment for a service, which is standard-rated unless a relief applies. Check that with HMRC or your accountant.
A credit note corrects an invoice after the event. HMRC says a valid one must reflect a genuine mistake or overcharge or an agreed reduction in the value of the supply, and be issued within 14 days of the refund payment being made.
It must show an identifying number and date, your name, address and registration number, the customer's name and address, a description of what is credited, the quantity and amount, the total credited excluding VAT, the VAT rate and amount in sterling, and the number and date of the original invoice. If it carries no VAT adjustment, it should say it is not a credit note for VAT.
The VAT is adjusted in the period in which the refund is paid, at the rate in force at the original tax point. A debit note, for an undercharge, follows similar rules and must be issued within 14 days of the increase being agreed.
GOV.UK says that if you agree a payment date, it must usually be within 30 days for public authorities or 60 days for business transactions. A longer business period must be fair to both sides. If no date is agreed, payment is late 30 days after the customer gets the invoice, or after delivery if that is later. Put the due date on the invoice.
The interest you can charge is 8% plus the Bank of England base rate for business to business transactions, and you cannot claim it if a contract sets a different rate. You can also charge a fixed sum for recovery costs, £40 for debts up to £999.99, £70 for £1,000 to £9,999.99 and £100 for £10,000 or more, once per payment. Send a new invoice if you add interest.
For illustration only, assume a 4% base rate, so 12% in total; that is not a forecast. A £5,000 invoice paid 60 days late carries £5,000 × 12% ÷ 365 × 60 = £98.63 interest, plus £70 compensation. Check the current base rate for a real figure.
HMRC says that unless you only issue less detailed retail invoices, you must keep a copy of all VAT invoices that you issue. VAT business records must be kept for at least 6 years, and registered businesses keep some of them digitally unless exempt. Our Making Tax Digital thresholds guide covers the income tax side.
Number invoices in one unbroken series, because a missing number prompts questions.
FarmHQ is a mobile-first farm office app for UK livestock farms, in pre-launch beta, where Ask Farmer Joe drafts and you confirm. It does not replace your accountant. See pricing, or the farm bookkeeping software checklist.
Not for zero-rated sales. HMRC says you do not have to issue VAT invoices for zero-rated supplies, and an invoice for them is not a VAT invoice. Most livestock sold for food is zero-rated. You still record the sales, and a plain sales invoice is good practice for your buyer and your accountant.
A simplified invoice can be used where the supply is £250 or less and the customer agrees. It shows your name, address and VAT number, the time of supply, a description, and the total payable including VAT with the rate. Above £250, or if the customer asks, issue a full VAT invoice.
Normally within 30 days of the tax point arising, which is usually when goods are delivered or work is done. HMRC allows extensions without applying in a few cases, such as waiting for invoices from your own suppliers.
Statutory interest is 8% plus the Bank of England base rate for business to business transactions, unless a contract sets a different rate. You can also charge fixed costs of £40, £70 or £100 depending on the size of the debt. Send a new invoice if you add interest.
If you agree a payment date, it must usually be within 60 days for business transactions, longer only if fair to both businesses. If no date is agreed, payment is late 30 days after the customer gets the invoice, or after delivery if that is later.