How to create a VAT only invoice

This article explains how to create a VAT only invoice.

Occasionally you may need to create a "VAT only" invoice.

Please note however that HMRC don't recommend doing this when you're in the process of registering for VAT. They recommend issuing invoices with the amounts shown inclusive of VAT and then re-issuing those invoices when your registration comes through. FreeAgent will do this for you if you choose the setting 'Registration Applied For' under Settings > VAT Registration.


If you can't avoid creating a VAT only invoice, create a new invoice and add an invoice item using the new item type VAT and the total amount of VAT in the 'Total Amount' field:


Now, when you view the invoice, you'll see the full amount of this item charged only as VAT:


You can also create VAT-only credit notes if needed. VAT-only invoices and credit notes will affect your VAT returns when issued if you are invoice accounting for VAT, and when marked as paid if you are cash accounting for VAT.

If you're on the Flat Rate Scheme, create a credit note for the full value of the invoice. Net off the credit note with the original, non-VAT invoice and then recreate the invoice to include VAT.

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