- Proforma invoices are preliminary documents sent to buyers before the delivery of goods/services.
- They provide details of the purchase and terms of the transaction.
- Proformas are not official documents and represent an informal agreement.
- They are useful for buyers to understand the details before making a binding agreement.
- Proformas are not mandatory to use.
- Invoices are legal documents that evidence a transaction and can be used to claim VAT.
- Proformas do not have an invoice number and should state that they are proforma invoices.
- Proformas include details of the issuing business, customer, date of issue, pricing, terms of sale, and whether VAT is applicable.
- The purpose of a proforma is to provide the buyer with an accurate estimate before proceeding with a transaction.
- Proformas do not create a tax point and the recipient cannot recover input tax.
- Using proformas instead of invoices defers the tax point and when VAT is payable to HMRC.
Source: marcusward.co
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
