The implementation of this directive will mean changes in the following areas:

Contents of VAT invoices Rules for electronic invoicing Self billing Translation of invoices.

Contents of VAT Invoices Fortunately most of the issues required by the new EU legislation are already specified in the existing UK VAT law (Regulation 14 to the Value Added Tax Regulations 1995 [SI1995/2518]).

However, four specific changes are required to the current invoicing formats.

These are 1: the type of supply is no longer required; 2: VAT no longer has to be shown at each rate; 3: the unit price must be shown for supplies of both goods and services; and 4: the requirement to show a sterling equivalent of the total invoice amount is removed - but remains for the individual supplies and for the total amount of VAT.

Customs relaxed

Customs are reasonably relaxed about the items which need to be removed (1, 2 and 4 above) and will allow businesses to continue to include these on UK VAT invoices for the immediate future.

However, Customs are required to ensure that the additional item, number 3 above, referring to unit price, is included on future UK VAT sales invoices in order to comply with the European Legislation.

This requirement applies to both goods and services - for services Customs expect to see some reference to "hourly rate" or "rate for the job" to address the issue. The requirements for a UK VAT invoice from 1 January 2004 are therefore as follows:

. An identifying number;

. The time of supply;

. The date of issue of the document;

. he name, address and registration number of the supplier;

. The name and address of the person whom to the goods or services are supplied;

. This requirement (type of supply) has been removed;

. A description sufficient to identify the goods or services supplied;

. For each description, the quantity of goods or the extent of the services, and the rate of the VAT and the amount payable, excluding VAT, expressed in sterling;

. he gross total amount payable, excluding VAT;

. The rate of any cash discount offered;

. This requirement which related to each separate rate of VAT charged on an invoice has been removed;

. The total amount of VAT chargeable, expressed in sterling.

. The unit price.

In addition, it is necessary to show the customer's VAT registration number on invoices which are provided to a VAT registered person in another Member State; the supplier must show the VAT registration number, including the country code of the recipient of the goods or services.

The simplification provisions that operate in the UK in respect of less detailed tax invoices and for invoices to persons who are not registered for VAT will continue unchanged.

The revised EC Legislation accepts that two separate methods of electronic transmission of invoices must be approved by all Member States. These two methods are advanced electronic signatures; and electronic data interchange (EDI).

Member States are allowed to accept other electronic means if they so choose.

Customs have also expressed a desire to facilitate the future developments of invoicing by electronic means.

The difficulty arises when electronic invoicing is used across border, particularly for intra-EU sales. It is then necessary for the supplier and or customer to ensure that the methodology that is proposed is acceptable in both the Member State of supply and the Member State of receipt.

Because of some of the complexities and issues relating to the development of the systems, the revenue authorities are allowed to continue requiring notification of the use of electronic invoicing at least until December 31, 2005.

Customs require businesses that commence electronic invoicing for supplies made after January 1, 2004 to notify them within 30 days.

Self billing

UK businesses will no longer have to obtain prior approval from Customs & Excise to selfbill provided a business meets all the requisite conditions.

Under the revised rules it will be necessary for there to be a written agreement between the supplier and the recipient of the goods or services who prepares the selfbilling documentation and there will be requirements in the legislation to review the self-billing agreements on a regular basis.

The self-biller will be required to keep and to update, for Customs & Excise use, a list of names, addresses and VAT registration numbers for the suppliers who have agreed to self-billing.

Translation of VAT invoices The EC Directive provides that "where necessary for control purposes, Member States may require invoices in respect of goods supplied or services rendered in their territory and invoices received by taxable persons in their territory to be translated into their national languages".

This requirement will be enforced in the UK on an "as and when needed" basis by Customs & Excise.

If you (or your clients) are involved in cross-border transactions it is possible that the taxation authority in the country of your customer will require you to provide a property translation of the invoice which has been raised.

Transitional period Although the new rules come into effect from January 1, 2004 Customs have said that they will not enforce them rigidly for at least the first six months.

After that time they will review matters and establish how well businesses have adapted to the changes before determining whether penalties will be raised for non-compliance.

VAT and the marine trade

Robert Warne of Princecroft Redman tells BB the new public notice 744 is due to be issued early in the new year and he will comment on the changes to the public notice once it has been formally issued.

He says the big changes will involve the Customs' interpretation of "recreation and pleasure" and that the measurements to calculate 15tons will be changing.