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Posted Mon, 09 Nov 2020 11:51:07 GMT by Maria
Hello, our company is introducing the strict “No PO no Payment” policy and we would like to make sure whether the rejection of supplier’s invoices in case of missing PO number is possible. Assuming the invoice fulfills all UK VAT invoicing requirements but is lacking the PO number that is required by our policy, are we still allowed to reject the invoice and ask the supplier to correct it? If not possible on the grounds of the VAT law, can we contractually oblige the supplier to add the PO number as a compulsory element of the invoice and reject the invoices if it is missing? If the supplier agrees to correct the invoice, can we also assume that only the second invoice, with added PO number, should be treated as the correct invoice to support our input tax deduction rights in the period of its receipt? We would like to avoid the situation when we receive an invoice without PO which we reject and thus we do not claim input tax in the period of its receipt and HMRC will consider this to be an error. Thank you very much for your support.
Posted Wed, 18 Nov 2020 11:53:33 GMT by HMRC Admin 11
Hi,

Please refer to paragraph 16.3.1 of VAT Notice 700 ‘VAT Guide’, which lists the information which must be shown on a VAT invoice. There is no requirement to show a PO number and you cannot reject an invoice from a supplier which shows all the information stated in the Notice.

We cannot comment on any additional information you request from your suppliers. That is a commercial matter between you and them.

VAT guide (VAT Notice 700) 16. VAT invoices

Thank you
Posted Thu, 19 Nov 2020 23:20:35 GMT by Trevor Steel
As HMRC have said, you can't reject an invoice on VAT grounds just because it doesn't quote your PO. But there's no reason why you couldn't agree a clause in the contracts requiring your suppliers to quote your PO. You could then reject invoices which don't quote the PO on contractual grounds. Suppliers whose invoices are rejected are likely to take one of two approaches. Some might cancel the original invoice with a credit note and issue a new invoice. Others might just reissue the same invoice with the PO number added. The latter approach might be regarded by HMRC as a duplicate invoice, as the invoices would be identical in terms of the information required for VAT. If so, VATREC8020 https://www.gov.uk/hmrc-internal-manuals/vat-trader-records/vatrec8020 states that the duplicate should be marked "This is not a VAT invoice" - presumably to avoid the risk of input tax being deducted twice. This implies that it's technically the first (rejected) invoice that's the valid one for VAT purposes. In practice I wouldn't just rely on suppliers marking duplicates in this way - it's best to have your own processes to ensure you don't make duplicate deductions.

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