Invoice vs Receipt: The Difference and What HMRC Needs

An invoice is a request for payment; a receipt is confirmation that the payment was made. That is the whole distinction, and GOV.UK states it plainly: "An invoice is not the same as a receipt, which is an acknowledgement of payment." This guide covers what each document is, what UK rules say it must show, how VAT changes the picture, and which one HMRC wants when you file.

Key takeaways

• An invoice requests payment and sets out what is owed and by when; a receipt confirms a payment has already been made.
• HMRC requires a VAT invoice between two VAT-registered businesses, and only a VAT-registered business can issue one.
• A full VAT invoice must show a unique sequential number, both parties' details, your VAT number, the tax point, and the VAT charged; a simplified invoice covers retail sales of £250 or less.
• To reclaim input VAT you normally need a valid VAT invoice or receipt, not just proof of payment like a card slip.
• Keep both: VAT records for at least 6 years, self-employed records for at least 5 years after the 31 January filing deadline.

What is an invoice?

An invoice is the document a seller issues to ask a customer for payment. It is raised when the work is done or the goods are supplied, before the money arrives, and states how much is owed and when. GOV.UK says an invoice must set out "how much the customer needs to pay you" and by when.

Any business can send an invoice to get paid. You are legally required to invoice only in one situation: GOV.UK says invoicing rules apply "if both you and the customer are registered for VAT", a business-to-business sale. Otherwise invoicing is standard practice rather than a legal duty, though the details still matter because the invoice is your record of income.

A basic (non-VAT) invoice must include:

• a unique identification number
• your company or business name, address and contact information
• the company name and address of the customer you are invoicing
• a clear description of what you are charging for
• the date the goods or service were provided (the supply date)
• the date of the invoice
• the amount being charged and the total amount owed

If you trade as a sole trader, the invoice also needs your name, any business name you use, and an address where legal documents can be delivered. A limited company must show its full name as it appears on the certificate of incorporation, and if you name any directors on the invoice you must name all of them.

What is a VAT invoice, and who can issue one?

Once you are VAT-registered, your invoices become VAT invoices and the rules tighten. HMRC is explicit: "Only VAT-registered businesses can issue VAT invoices", and you must issue one within 30 days of the date you make the supply to another VAT-registered person.

A full VAT invoice must show more than a basic one: a sequential number that uniquely identifies the document, the time of supply (the tax point), the date of issue, your name, address and VAT registration number, the customer's name and address, a description of the goods or services, the rate of VAT and the amount excluding VAT for each line, and the total VAT payable in sterling.

There is a lighter version for small sales. If you are a retailer and the sale is £250 or less including VAT, you can issue a simplified invoice showing your name, address and VAT number, the tax point, a description, and for each VAT rate the total payable including VAT. Above £250 you must issue a full or modified VAT invoice. This is why a supermarket till slip that lists the shop's VAT number and the VAT total is itself a valid VAT invoice for a small purchase.

What is a receipt?

A receipt is proof that a payment has been made. The seller issues it after the money arrives, acknowledging the amount, the date, and what it was for. Where an invoice looks forward to a payment still owed, a receipt looks back at one that is settled.

Receipts are not governed by the same statutory list as invoices. A card slip, a till receipt, a "paid" stamp on an invoice, or an email confirmation can all serve as one. What makes a receipt useful to a business is the evidence it carries: who you paid, how much, when, and for what. For a VAT-registered buyer, that evidence has to meet the VAT-invoice standard before you can reclaim the tax.

Invoice vs receipt: the key differences

The overlap that confuses people is VAT. A simplified VAT invoice, such as a till receipt from a VAT-registered shop, is the seller's request and the buyer's proof of payment in a single slip. That does not make the two the same document; it means one slip can do both jobs for a paid-on-the-spot sale.

A worked example: one sale, two documents

Say you are a VAT-registered web designer. You finish a £1,200 project for a VAT-registered client on 10 June 2026.

1. You issue a VAT invoice. It adds 20% VAT (£240) to the £1,200 fee, for a total of £1,440, and shows your VAT number, the client's details, the supply date, and a due date of, say, 10 July. This is the request for payment, and the document that lets your client reclaim the £240 as input VAT.
2. The client pays £1,440 on 25 June. The money reaches your account.
3. You issue a receipt. It confirms that £1,440 was received on 25 June against that invoice. Nothing new is owed; the receipt closes the loop.

Same sale, two documents, two jobs. The invoice created the debt and the tax point; the receipt recorded that the debt was cleared. If the client is later asked to prove the expense, they hold your invoice for the VAT and their bank record for the payment.

Which document does HMRC need from you?

It depends on which side of the transaction you are on.

When you sell, keep a copy of every invoice you raise, because that is your record of income. HMRC says you must keep a copy of every VAT invoice you issue, and VAT records generally have to be kept for at least 6 years. A sole trader outside VAT still keeps sales records for at least 5 years after the 31 January submission deadline of the relevant tax year.

When you buy, the document you need depends on what you are claiming. To deduct a cost against your profit, a receipt or invoice showing what you bought is proof enough. To reclaim VAT, the bar is higher: HMRC says a claim to input tax "must be supported by appropriate documentary evidence", normally a valid VAT invoice, or a simplified invoice where the VAT-inclusive value is £250 or less. A bank statement or card slip alone is not enough for the VAT, because neither shows the seller's VAT number or the tax charged. For more, see our guides to HMRC record-keeping requirements and what makes a valid business receipt.

Common misconceptions

"An invoice and a receipt are interchangeable." They are not. One asks for money that is still owed; the other confirms money that has been paid. Sending a client an invoice marked "paid" turns it into a receipt only once payment has been received.

"You need to be VAT-registered to send an invoice." No. Any business can invoice to get paid. Registration changes the type of invoice: only VAT-registered businesses issue VAT invoices, and only those support a VAT reclaim. A pro forma invoice is a third case again, a preliminary quote that is not a demand for payment at all.

"Any receipt lets my customer reclaim the VAT." Only one that meets the VAT-invoice standard does. A handwritten "paid, thanks" note proves payment but carries no VAT number or tax breakdown, so the buyer cannot use it to reclaim input tax. Whether you can issue a VAT invoice at all turns on the VAT registration threshold.

How SparkReceipt fits

SparkReceipt is not an invoicing tool, so it does not create the invoices you send. It captures the paperwork on both sides so nothing goes missing before tax time. Photograph a supplier receipt or invoice and the AI receipt scanner reads the vendor, date, total and VAT, then files it in the right category. On the income side, SparkReceipt records what you invoice and get paid in the same expense tracker, and uploaded bank statements are matched against your documents so a payment with no receipt is flagged. At filing time you publish to QuickBooks Online or Xero or export a report. See pricing to get started.

FAQ

Does an invoice count as proof of payment? No. An invoice is a request for payment, so on its own it shows only that money is owed. Proof of payment is the receipt, the bank record, or an invoice marked as paid once the money has arrived.

Can one document be both an invoice and a receipt? Yes, for a sale paid on the spot. A simplified VAT invoice, such as a till receipt from a VAT-registered shop, states what was supplied and that it was paid in one slip. For work invoiced now and paid later, you issue the invoice first and the receipt after payment.

Do I have to give a customer a receipt? There is no general legal duty to issue a receipt, though a customer can ask for proof of payment. A VAT-registered business must, however, provide a VAT invoice to another VAT-registered customer, and for a retail sale that request is met by a VAT receipt or till slip.

Which do I keep for HMRC, the invoice or the receipt? Keep both. Invoices you issue are your income record; receipts and invoices you receive are your expense records. VAT records must be kept for at least 6 years, self-employed records for at least 5 years after the filing deadline.

Can I reclaim VAT with just a receipt? Only if the receipt is a valid VAT invoice or simplified invoice, meaning it shows the seller's VAT number and the VAT charged. A plain card slip or bank entry proves you paid but does not support a VAT reclaim.

Key takeaways

• An invoice requests payment before it is made; a receipt confirms a payment already made. GOV.UK treats them as different documents.
• Any business can invoice, but only a VAT-registered business can issue a VAT invoice, within 30 days of the supply to a VAT-registered customer.
• A full VAT invoice needs a unique sequential number, both parties' details, your VAT number, the tax point and the VAT charged; simplified invoices cover retail sales of £250 or less.
• To reclaim input VAT you need a valid VAT invoice or receipt; for the expense deduction alone, a plain receipt is enough.
• Keep both: VAT records for at least 6 years, self-employed records for at least 5 years after the 31 January deadline.