Can a salon or barbershop use a supplier statement rather than a VAT invoice to claim back VAT?

We get asked this a lot by Clients and non-Clients and the answer is within the depths of the new MTD for VAT legislation.

In short the answer is yes – you can – but there are some limitations (see below) – and we think you should only do this in limited circumstances. Using a VAT invoice is always the better option if you can since (for example) it helps with later analysis of costs and stops duplication of bills.

Here’s the exact wording from HMRC’s VAT Notice 700/22: Making Tax Digital for VAT

“Some businesses record the value of each supply from a supplier statement instead of individual invoices. This may occur particularly where a business receives a large number of invoices from the same source. In HMRC’s view, it is best practice to record digitally the individual supplies as this means less risk of invoices either being missed completely or being entered twice – once as an invoice, and once as part of the statement. There is also less risk of the wrong rate of VAT being applied.

On the other hand, HMRC accepts there may be additional work for a business in capturing individual supplies digitally and this in itself could lead to data entry errors. Therefore, HMRC can accept the recording of totals from a supplier statement where all the supplies on the statement relate to the same VAT period and the total VAT charged at each rate is shown. If you choose to do this, you must also cross reference all supplies on the supplier statement to invoices received, but this can be done outside of your digital records.”

The following rule has the force of law:

Where a supplier issues a statement for a period you may record the totals from the supplier statement (rather than the individual invoices) provided all supplies on the statement are to be included on the same return and the total VAT charged at each rate is shown.

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