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Under the VAT Regulations 1995, invoices for reverse charge supplies must include the reference ‘reverse charge�.

The invoice must make clear that the reverse charge is applicable, but the precise wording is not prescribed in law. The following examples fulfil the requirement:

• reverse charge: VAT Act 1994 Section 55A applies
• reverse charge: S55A VATA 94 applies
• reverse charge: Customer to pay the VAT to HMRC.

When making a sale to which the reverse charge procedure applies, the supplier must show all the information normally required to be shown on a VAT invoice and must also include a reference on the invoice to make it clear that the reverse charge applies and that the customer is required to account for the VAT.

Unless otherwise agreed with HMRC, the amount of VAT to be accounted for under the reverse charge should be clearly stated on the invoice but should not be included in the amount shown as total VAT charged.

If the supplier produces invoices using an IT system, and that system cannot show the amount to be accounted for under the reverse charge, then the wording should state that VAT is to be accounted for by the supplier’s customer at the standard rate of VAT, based on the VAT-exclusive selling price for the reverse charge goods or services.

But the customer must be able to identify the reverse charge services, for example with a legend such as ‘customer to account to HMRC for the reverse charge output tax on the VAT-exclusive price of items marked reverse charge�.

HMRC will allow the use of electronic invoices that use a coded representation rather than textual form as long as the content can be demonstrated to an HMRC auditor by both parties to the electronic invoicing exchange. This is subject to the agreement of both parties.

The liability to apply the reverse charge rests with the customer. If a customer receives an invoice that does not specify the reverse charge applies, but the supplies should be subject to the reverse charge, they should go back to their supplier to request an invoice that complies with the above so that the audit trail is corrected on both sides. However the customer can still use the incorrect invoice as the basis for accounting for the reverse charge, and is still required to account for the output tax even if an incorrect invoice has been issued. The customer is still responsible for applying the reverse charge even if they have not been issued with a reverse charge invoice.