What counts as a valid VAT receipt? Reclaiming VAT on business expenses

A VAT-registered business can usually reclaim the VAT it pays on business costs. "Usually" is doing a lot of work in that sentence. The VAT has to be on a business purchase, it must not be one of the blocked categories, and you have to hold the right evidence. Most lost reclaims fail on the last point: the receipt.

This guide covers what HMRC accepts as evidence, the shortcuts it allows, and the costs where no receipt will help you.

The invoice is the evidence

HMRC is plain about it: the VAT invoices you receive are the primary evidence for recovering the VAT you have paid. "VAT invoice" just means an invoice that carries the details VAT rules require. Most proper invoices from VAT-registered suppliers already do.

Only VAT-registered businesses can issue VAT invoices. If a supplier is not registered, there is no VAT on the bill to reclaim, whatever the total.

What a full VAT invoice shows

Under VAT Notice 700, a full VAT invoice must show:

• a unique sequential invoice number
• the time of supply (the tax point), and the date of issue if different
• the supplier's name, address and VAT registration number
• the customer's name and address
• a description that identifies the goods or services
• for each line, the quantity or extent, the VAT rate and the amount excluding VAT
• the total excluding VAT, and the total VAT in sterling
• the unit price, and the rate of any cash discount offered

If one of these is missing, it is not automatically fatal (more on that below), but it is the start of a conversation you would rather not have.

Receipts under £250: the simplified invoice

For a supply of £250 or less including VAT, a supplier can issue a simplified invoice instead. Retailers can do the same. It needs less:

Most till receipts from a VAT-registered shop, café or fuel station are simplified invoices. Look for the VAT number: it is the one detail that turns a receipt into evidence. Above £250, the supplier must give you a full or modified VAT invoice.

If a simplified invoice does not show the VAT separately, you work it out from the total. At 20%, that means dividing the VAT-inclusive price by 1.2. GOV.UK's own example is a table for £180 including VAT: £150 before VAT, so £30 to reclaim.

The £25 exceptions

For a few small purchases, HMRC does not require a VAT invoice at all, provided the total for each supply is £25 or less including VAT, and you are sure the supplier is VAT-registered:

• telephone calls from public or private phones
• purchases from coin-operated machines
• car park charges
• a single or return toll paid at the tollbooth

Staff expenses: whose name is on the receipt?

A VAT invoice is normally made out to the business. Subsistence and petrol are the exceptions: the invoice can be made out to the employee, and the business can still treat the VAT as its input tax.

How you pay matters too. If you pay staff a flat rate for subsistence, you cannot reclaim the VAT on what they spent. If the business pays the actual cost, it can reclaim the VAT on it; if it pays a proportion, it can claim the VAT fraction of what it paid. Hotel accommodation on a business trip is reclaimable, as are meals taken away from the normal place of work on a business trip.

If your staff also claim business mileage, that has its own rules on what the rate covers; see HMRC mileage rates explained (2026/27).

What you cannot reclaim, receipt or not

Some costs are blocked whatever paperwork you hold. VAT Notice 700 lists, among others:

• anything not used for the business
• buying a car, including fitted accessories and delivery
• business entertainment, meaning hospitality for anyone other than your own staff

Staff entertainment is different: VAT on it can be recovered to the extent the spending relates to the business.

No receipt, or the wrong one

If you do not hold a VAT invoice, HMRC expects you to go back to the supplier and ask for one first. If that fails, you have to satisfy HMRC, with other evidence, that a taxable supply really happened, was made to you by a VAT-registered supplier, and was for your business. HMRC may then use its discretion to allow the claim. The same applies to an invoice that is missing required details.

"May" is the word to notice. Discretion is not an entitlement, and repeated reliance on it gets less sympathetic.

Keeping the evidence

VAT records must generally be kept for at least six years. A scanned image of an invoice can replace the paper if it shows every detail VAT needs; typing the figures into software does not, so you would need to keep the original. Our guide to how long to keep receipts for HMRC covers the other periods.

How ClaimSnappy handles VAT on receipts

When you snap a receipt, ClaimSnappy reads the VAT printed on it. Where only the total and rate are shown, it works the VAT out from the VAT-inclusive total, and it notes whether the figure was printed or calculated. If the printed VAT does not add up at the stated rate, the scan is marked as uncertain so you check it before saving.

A receipt with VAT but no VAT number for the seller is flagged before the claim is sent, with the rule it comes from, so it can be fixed while the receipt is still in your pocket. Entertaining is flagged with a prompt to name who was entertained.

The month's claim is prepared for you to check and send, and your bookkeeper can take the expenses as PDF, CSV or import files for Xero, QuickBooks Online and Sage 50. Whether a particular amount is reclaimable is still for you and your accountant to decide; the app keeps the evidence straight.