What is an invoice number? Invoice numbers explained for UK suppliers

Every correction leads back to one reference. A supplier who raises a credit note must quote "the number and date of the original VAT invoice or invoices relating to the supply". A customer who loses an invoice and asks for a copy should, in HMRC's guidance, receive one marked as a duplicate. And on Peppol, an invoice without its number breaks a fatal validation rule.

What is an invoice number?

The identifier a supplier gives each invoice it issues. HMRC's VAT guide, Notice 700, puts it first in the list of details a VAT invoice must carry: "You must show the following details on any VAT invoice you issue:" and the first item is "a sequential number based on one or more series which uniquely identifies the document".

That rule binds whoever issues the VAT invoice. Normally that is the supplier. Under self-billing the customer writes the invoice instead, and the supplier's duty to issue one falls away.

HMRC's record-keeping notice, VAT Notice 700/21, shows what this looks like in practice. Its worked example of a VAT invoice is headed "Sales invoice no 174".

GOV.UK's general guide to invoicing is not limited to VAT invoices. It says "Your invoice must include:" and starts the list with "a unique identification number". The guide is still live, and GOV.UK shows it as last updated in August 2015. It also says: "You must use VAT invoices if you and your customer are VAT registered." On a VAT invoice, HMRC's sequential rule is the one that applies.

An invoice number is not a VAT number. HMRC lists "your name, address and VAT registration number" as a separate item on the same invoice. The VAT number identifies the supplier. The invoice number identifies the invoice.

An invoice number at a glance

What does UK law say about invoice numbers?

It must be sequential and unique. The requirement sits in regulation 14(1)(a) of the Value Added Tax Regulations 1995, which asks for "a sequential number based on one or more series which uniquely identifies the document". HMRC's guidance repeats those words in Notice 700 and Notice 700/21.

The wording has not always been this strict. HMRC's VAT Trader Records manual explains the change: "Previously, the wording of regulation 14(1)(a) stated only that the invoice required ‘an identifying number’." The new words came in with the Value Added Tax (Amendment) (No. 5) Regulations 2007, which state: "the remaining regulations come into force on 1st October 2007."

For most suppliers, nothing had to change. HMRC's manual records that "Consultation with businesses prior to the change of wording confirmed that the new wording has no effect on the way that the majority of businesses number their invoices, as they already issue invoices from a sequential series."

HMRC eased the switch at the time: "HMRC has adopted a ‘light touch’ approach for a twelve month transitional period." That period covered the twelve months after the change in October 2007. It is long over.

The format of the invoice does not change the rule. HMRC's electronic invoicing notice, VAT Notice 700/63, says: "Electronic invoices must contain the same information as paper invoices." Its table of required details gives the number as "A sequential number based on one or more series which uniquely identifies the document." A VAT invoice sent by EDI or Peppol carries the same obligation as one sent on paper.

How should invoice numbers be formatted?

HMRC's VAT Trader Records manual answers the common questions. It describes the number as "A unique sequential number: This number should be based on a series of numbers that you use to identify your invoices." Its answers, in short:

1. Letters are allowed. "The ‘invoice number’ can be numerical, or it can be a combination of numbers and letters, as long as it forms part of a unique and sequential series."
2. You do not have to start at 1. A business that wanted to begin at invoice 1135 is told: "Yes, as long as the invoice series runs consecutively from that point."
3. A customer reference can become part of the number. Adding a running number to a unique customer reference creates a unique and sequential series, in HMRC's own answer.
4. Several series can run at once. For a supplier with several customers, and for a business with several units or divisions: "Yes, it is acceptable to operate more than one sequence at the same time."
5. One series can cover several group companies. For a service centre that invoices for several companies from one series: "Yes, this satisfies the requirement for invoices to be issued sequentially from one or more series."

So a supplier can run one series per retailer, or one per site, and stay within the rule. HMRC permits it; it does not demand it.

What about gaps, cancelled invoices and copies?

Gaps. HMRC's manual asks what happens where an invoice is cancelled or spoiled and never issued. Its answer: "As long as you retain the cancelled or spoiled invoice in your accounting records, or you can provide an explanation for the break in sequence, this is acceptable." Keep the spoiled invoice, or be able to explain the gap.

Copies. A customer may ask for a copy because the original is lost. HMRC's guidance to its officers says the supplier "should clearly mark the copy invoice to show that it is a" duplicate. Extra copies a trader wants to issue for other reasons are a different case: "Each additional copy invoice must be clearly and indelibly marked" with the words "THIS IS NOT A VAT INVOICE".

Duplicates. HMRC's concern is the customer's VAT claim: "There is no specific law relating to duplicate VAT invoices, but present policy recognises the risk that the recipient of a duplicate invoice may deduct input tax twice."

HMRC treats duplicates as a known control point in electronic invoicing too. Its officers' checklist for reviewing EDI invoicing at the sender suggests, while a system is being trialled, testing the recipient's controls by "sending a duplicate file (with the same file reference number)" and "sending a file containing a duplicate invoice". That checklist is guidance for HMRC officers, last updated in 2016, not a rule for suppliers.

Invoice number vs PO number vs VAT number

Three numbers sit on the same invoice. The invoice number is the supplier's. The purchase order (PO) number is the customer's. As the purchase order guide puts it: "The PO number belongs to the customer, and customers expect your order response, delivery note, ASN and invoice to quote it back so each can be matched to the order."

They are separate references, and they do not pair off one to one. GS1's definition of the invoice message says: "A seller may invoice for one or more transactions" and "An invoice may refer to goods, items or services related to one or more orders, delivery instructions, call-offs, etc..."

On Peppol the customer's reference has a rule of its own: "An invoice must have buyer reference (BT-10) or purchase order reference." The invoice number has no such alternative.

Which documents quote the invoice number back?

Every document that corrects the invoice. HMRC's VAT guide sets the rule for both directions.

• Credit notes. Paragraph 18.2.3 requires "the number and date of the original VAT invoice or invoices relating to the supply".
• Debit notes. Paragraph 18.2.4 requires the "identifying number and date of issue of the VAT invoice or invoices relating to the supply for which there is an increase in price". As the debit note guide says: "A debit note is not an invoice in its own right. It adjusts one, and HMRC will not treat it as valid without the original invoice's number and date."
• Self-billed documents. Notice 700 says a supplier must issue a VAT invoice to a registered customer unless, among other cases, "your customer operates self-billing arrangements". VAT Notice 700/62 then tells the customer to "complete self-billed documents showing the supplier’s name, address and VAT registration number, together with all the other details that make up a full VAT invoice". The sequential number is one of those details. The self-billing guide covers how that works.

The electronic formats build the link in. In EANCOM, a credit note or debit note quotes the original with the reference qualifier "IV = Invoice number". On Peppol, the credit note's own field BT-25, preceding invoice reference, holds "The identification of an Invoice that was previously sent by the Seller".

How does an invoice number travel by EDI and Peppol?

In a fixed field that the standard defines.

EANCOM EDI. In GS1's INVOIC message, the BGM segment "is used to indicate the type and function of a message and to transmit the identifying number." GS1's own example: "This example identifies the document as being an original commercial invoice using the code value 380. The document has the reference number 432097." Other numbers have their own qualifiers in the reference segment, such as "DQ = Delivery note number" and "CD = Credit note number". The EDI invoice guide walks through the full message: "In GS1's worked example, the invoice number sits in BGM, the order and delivery note numbers in RFF, the parties' GLNs in NAD and each product line in LIN."

Peppol. OpenPeppol's BIS Billing 3.0 calls BT-1, the invoice number, "A unique identification of the Invoice" and points to the sequential number in the EU VAT Directive. "An Invoice shall have an Invoice number (BT-1)" is rule BR-02, and it is fatal. As the Peppol invoice guide explains, "The sending Access Point must validate the invoice before it leaves." An invoice that breaks a fatal rule "is stopped instead of delivered".

One buyer platform goes further and checks uniqueness. In the French public sector, as the Chorus Pro guide notes: "Chorus Pro checks that every invoice number is unique."

A PDF works differently. As the EDI invoice guide puts it: "A PDF attached to an email is not an eInvoice, however tidy it looks, because the buyer's software cannot read it without help."

Sending numbered invoices through Transalis

Transalis is a managed outcomes provider for B2B integration, EDI and eInvoicing. An invoice is one payload among many. As the EDI page puts it: "Orders, invoices, dispatch notes, inventory updates and acknowledgements flow automatically between your systems, your 3PL partners and your trading partners, eliminating duplicate data entry and manual errors."

The EDI page sets out the service: "Transalis runs your entire EDI operation as a managed outcome. Every format, every retailer, every ERP. One connection reaches 15,000+ trading partners across 50+ countries, with no software to run and no per-transaction penalty."

For Peppol, "Transalis is a certified Peppol Access Point, so it handles every step after your ERP." The eInvoicing page covers the managed Peppol service.

Secure your connection, or see the managed service on the EDI page.