Tradespeople: Use a proforma, but give a VAT invoice within 30 days

A proforma invoice is a preliminary estimate or confirmation of proposed terms; it is not a VAT invoice. A final VAT or commercial invoice is the accounting document and the only acceptable evidence for VAT recovery. Use a proforma for quotes, approvals or export preliminaries, then issue a proper VAT invoice the moment supply happens or payment lands.

TL;DR

• Proforma invoices are preliminary quotes used for approval and export planning, not valid for VAT recovery or recording as a sale.
• VAT invoices must be issued within 30 days of payment or supply, containing specific details such as a unique number, tax point, and VAT breakdown.
• Using a proforma as a VAT invoice can cause legal and compliance issues, especially during VAT inspections or reconciliations.
• Exporters need a commercial invoice with detailed customs information, which is distinct from a proforma, though referencing can link both documents.
• Implementing mobile invoicing tools that generate sequential VAT invoices immediately after work completion can improve cash flow and compliance.

What is a regular VAT or commercial invoice?

A VAT invoice is the document that confirms a supply has actually happened. It fixes the tax point, the moment HMRC treats the transaction as having occurred for VAT purposes, and it records the buyer's obligation to pay. Unlike a quote or estimate, it is not provisional: once issued, it becomes part of the business's accounting records and the customer's evidence for reclaiming input VAT.

Most VAT-registered businesses must issue a VAT invoice whenever they supply goods or services to another VAT-registered business. Timing matters here. According to HMRC's guidance on pro-forma invoices, if a payment is taken or a supply is made following a proforma, the seller must issue a full VAT invoice within 30 days. That invoice, not the earlier proforma, is what goes into the VAT return.

The practical reason this matters so much comes down to bookkeeping accuracy and VAT recovery:

• A VAT invoice creates the legal tax point that determines which VAT period a sale belongs to.
• It gives the buyer the paperwork they need to reclaim input VAT, something a proforma cannot do.
• It forms part of the statutory record businesses must keep under VAT Notice 700/21.
• It carries its own sequential number, separate from any proforma that came before it.

Skip this step, or try to make a proforma do the job, and both sides end up with a VAT problem that surfaces at the worst possible time, usually during a VAT inspection or year-end reconciliation.

What is a proforma invoice and what is it used for?

A proforma invoice is a quote dressed up to look like an invoice. It sets out proposed terms, price, quantities and delivery details before any supply has taken place, which makes it useful for getting a buyer's sign-off, securing financing or giving customs an early look at a shipment's likely value. HMRC is blunt about its status: VATREC9010 describes it as a commercial document that may contain some or all of the usual invoice information but does not fulfil the primary function of a VAT invoice. It is not normally an accounting document at all.

That distinction shapes how businesses actually use proformas day to day:

• Confirming prices and terms with a buyer before committing to the order.
• Supporting a buyer's internal purchasing approval or finance application.
• Giving a preliminary customs value for export planning.
• Reserving stock or scheduling work without triggering a tax point.

Because a proforma can look almost identical to a real invoice, the labelling matters more than people expect. HMRC's own advice is to mark it clearly, preferably with the wording "This is not a VAT invoice". That one line prevents a buyer's accounts team from filing it as a tax document and later trying to reclaim VAT against it, which HMRC will not allow. A proforma without that label is an invitation to confusion, particularly in businesses where purchasing and finance sit in different departments and the first document they see is treated as the real thing.

Differences: function, timing, accounting and VAT consequences

The two documents diverge on three fronts: what they do, when they appear, and what happens to VAT afterwards.

• Function and timing: a proforma is issued before supply, while negotiating terms or confirming an order; a VAT invoice is issued at or after the point of supply, once goods have shipped or work is complete.
• Accounting treatment: a proforma sits outside the accounts, it is not posted as a sale and does not create a debtor balance; a VAT invoice is posted, affects the VAT return, and creates a legal debt.
• VAT recovery: input VAT cannot be reclaimed against a proforma under any circumstance, a point confirmed in Schedule 11 of the VAT Act 1994, which makes a valid VAT invoice a condition of claiming input tax.

The trickiest moment is when a customer actually pays against a proforma, which happens often with deposits, retainers or advance payments on larger jobs. HMRC's rule here is specific: once payment is received or the supply is made, the business must issue a full VAT invoice within 30 days. That invoice needs its own sequential number and its own correct tax point, it cannot simply be the proforma relabelled or reprinted.

This is where a lot of small businesses slip up. They treat the proforma as close enough, especially when the amounts match exactly, and either delay the real invoice or skip it altogether. The customer then has no valid VAT invoice to put through their own accounts, the seller has an unclear tax point for their VAT return, and if HMRC ever checks the books, neither party has what they need. The fix costs nothing: generate the VAT invoice as soon as money moves or the job finishes, and treat the 30-day window as a deadline, not a suggestion.

What to include on each document

A VAT invoice has to carry specific information or it is not valid for VAT purposes, regardless of how complete it looks otherwise. VAT Notice 700/21 sets out the fields HMRC expects on a full VAT invoice:

• A unique, sequential invoice number that cannot repeat.
• The tax point, meaning the date of supply or the date payment was received.
• The supplier's name, address and VAT registration number.
• The customer's name and address.
• A description of the goods or services supplied.
• Quantities, unit prices, the VAT rate applied to each line, and the VAT amount.
• The total excluding VAT, the total VAT charged, and the total including VAT.

HMRC allows simplified or modified VAT invoices for retail-style transactions under £250, cutting the detail required for low-value sales. VAT Notice 700/21 confirms that threshold, which matters for trades businesses raising frequent, lower-value invoices who would otherwise be filling in fields no customer ever checks.

A proforma has no mandatory field list, but a well-built one borrows the shape of a VAT invoice without pretending to be one: the proposed price, a description of the work or goods, a validity date, and the bank details or payment terms the buyer will eventually need. The one addition that actually matters is the label itself, "This is not a VAT invoice", placed somewhere the buyer's finance team cannot miss it. Leave that off and you are relying on goodwill to stop someone filing it as the real thing.

Exports and commercial invoices: what customs actually need

Exporting adds a second document into the mix, and it is not interchangeable with either a proforma or a standard domestic VAT invoice. A commercial invoice must travel with the shipment and typically needs:

• Full seller and buyer details, plus the invoice number and date.
• Pricing, currency and payment terms.
• Quantities, weights and packaging details.
• HS tariff codes, Incoterms and the country of origin.
• The actual value of the goods, used by customs to assess duty.

A proforma can still play a role here. Exporters often send one early to confirm pricing and terms before the goods ship, which gives the buyer something to arrange financing or import licences against. Customs, however, work from the commercial invoice, not the proforma, when goods actually cross a border. Government guidance recommends referencing the proforma's number and date on the final commercial invoice, so customs officials and both businesses' accounts teams can see the two documents are linked rather than contradictory.

Requirements also shift by destination. Some markets expect commercial invoices certified by a chamber of commerce, or translated into the local language, so it is worth checking the specific country's rules before goods leave rather than after they get held at the border.

A step-by-step checklist from proforma to paid invoice

Getting from quote to compliant VAT invoice without a gap in the paper trail comes down to three steps.

1. Prepare the proforma: list the price, description, quantities and payment terms, mark it clearly with "This is not a VAT invoice", and send it for approval or as part of a financing or customs preliminary.
2. Issue the VAT invoice: the moment payment arrives or the work is done, raise a full VAT invoice with its own sequential number, the correct tax point, and a reference back to the proforma or purchase order so the two documents stay linked.
3. Keep the records straight: file both documents together, note the date the VAT invoice went out, and treat the 30-day deadline from HMRC's guidance as the outer limit, not the target.

Pro Tip: Generate the VAT invoice the same day the job finishes rather than waiting for the customer to chase you, it shortens the payment cycle and removes any excuse for the 30-day deadline to slip.

Businesses that build this into a routine, rather than treating it as a bookkeeping afterthought, tend to get paid faster simply because the final invoice lands while the work is still fresh in the customer's mind.

How tradespeople move from quote to paid invoice on site

For electricians, plumbers, joiners and builders, the proforma-to-invoice gap used to mean a trip back to the office before any paperwork went out. Mobile-first invoicing closes that gap: a quote agreed on site can become a labelled proforma in minutes, and once the job is signed off, the same system can generate a sequentially numbered VAT invoice without re-keying a single line.

When choosing a tool for this workflow, a few capabilities matter more than the rest:

• Built-in VAT and CIS handling, so deductions and rates are calculated correctly without manual lookups.
• Sequential invoice numbering that cannot be duplicated or skipped.
• Part-payment tracking for deposits or staged work.
• Branded PDF invoices that look professional when sent by WhatsApp or email.
• Automated, polite payment reminders that chase without the business having to do it personally.

Capturing sign-off at the point of completion, whether a signature or a verbal confirmation logged against the job, removes most disputes before they start. VanBill's workflow is built around that exact sequence: quote, approval, then a VAT invoice sent from the van within minutes of finishing the job.

Why the paperwork order matters more than it looks

Confusing a proforma with a VAT invoice rarely causes problems immediately. It shows up weeks later, when a customer tries to reclaim VAT on a document that was never valid for that purpose, or when a VAT return is built on a tax point that was never properly fixed. Small businesses lose more time untangling that mess than they would ever spend getting the sequence right the first time.

The fix is not complicated: label proformas honestly, and issue the real VAT invoice the moment payment or supply happens, not whenever it becomes convenient.

A faster way to issue the final invoice

Everything in the checklist above, the labelled proforma, the prompt VAT invoice, the 30-day deadline, gets easier when the tool doing the invoicing was built for trades work rather than adapted from general accounting software.

• One-tap conversion from an approved quote straight into a numbered VAT invoice.
• VAT and CIS calculated automatically on every line, so rates do not need manual checking.
• Branded PDF invoices sent by WhatsApp or email directly from the job site.
• Friendly automated reminders that chase late payers without an awkward phone call.

VanBill starts with a free trial — try it on your next job and see whether mobile invoicing actually closes the gap between finishing a job and getting paid for it.

FAQ

What is the difference between a proforma invoice and a bill?

A bill, in everyday use, usually means the final request for payment, which is functionally the same as a VAT or commercial invoice. A proforma is issued before that point, to confirm terms or price, and it has no legal standing as a demand for payment or as VAT evidence.

Is it okay to pay a proforma invoice?

Yes, businesses do pay against proformas, particularly for deposits or advance orders, but the seller must then issue a full VAT invoice within 30 days of that payment, as set out in HMRC's guidance. The buyer cannot reclaim input VAT until that proper VAT invoice arrives.

What is the difference between a proforma invoice and a purchase invoice?

A purchase invoice, from the buyer's side, is simply the VAT or commercial invoice they receive and record in their accounts payable. A proforma is a preliminary document sent before that, used to confirm terms, and it never gets posted as an actual purchase because it carries no tax point.

Why do companies issue proforma invoices?

Companies use proformas to confirm pricing and terms before a sale is finalised, which helps with buyer approvals, financing applications and export planning. Exporters commonly use them to let buyers arrange payment or import paperwork ahead of the final commercial invoice.