What changes on invoices after VAT registration
What changes on a consultancy's invoices once it registers for VAT: the VAT number, the Tax Invoice heading, client tax numbers and the rate applied.
By Achekam · · 5 min read · For Consulting businesses in South Africa, Nigeria, Kenya
Launching soon. Some of the screens this article describes for Nigerian and Kenyan businesses are not reachable in Achekam yet. They are coming soon.
The day a consultancy registers for VAT, its invoices have to change. They must show the registration number, they become tax invoices, and fees now carry VAT at the right rate. Get it wrong and your clients may be unable to claim the VAT you charged them, or you may charge VAT you were not entitled to charge.
Achekam handles much of this from one setting. There are also gaps you need to know about, including one defect that is worth checking for on every invoice you send.
Entering the VAT number in Firm Profile
Your VAT registration number goes in Settings, under Firm Profile. Documents made by the server print it, and they are titled Tax Invoice only when a VAT number is set. Without one, they are not headed as tax invoices.
That makes the timing of the setting matter. Enter the number when your registration takes effect, not before, and look closely at the first invoice you issue afterwards.
Achekam does not check whether you are registered
Achekam does not check whether a business is actually registered for VAT before charging VAT on its documents. If an invoice line carries VAT, VAT is charged. Issuing an invoice posts it to the ledger as debtors, sales and output VAT, so a line with VAT on it creates output VAT in your books whether or not you are registered.
Before registration, make sure your invoice lines carry no VAT. After it, make sure they do. That decision stays with you.
When documents are titled Tax Invoice, and one defect
There is a known defect to watch for. The invoice PDF downloaded or e-mailed from the invoice screen is always headed TAX INVOICE and cites the South African VAT Act, whatever the business's country or VAT number. The server's own template gets this right; the PDF made in the browser does not.
For a South African consultancy that is registered, the heading on that PDF happens to be right. For a South African consultancy that is not yet registered, and for any consultancy in Nigeria or Kenya, it is wrong. Until the defect is fixed, open every invoice PDF and check its heading before it reaches a client.
How a customer's tax number prints
When a client has a tax number on record, it prints on your documents. It is labelled as a VAT number only when it looks like a South African VAT number; any other number prints labelled as a tax number. For Nigerian and Kenyan clients, expect to see their number shown as a tax number rather than a VAT number.
The rate in force on the invoice date
When an invoice line states no rate, VAT is taken at the rate in force on the invoice date, from the approved rule for the issuing workspace's country. Where no approved rule applies, Achekam refuses the line rather than guessing a rate. A credit note uses its original invoice's date and tax codes, so a correction is taxed the way the original was.
| South Africa | Nigeria | Kenya | |
|---|---|---|---|
| Standard rate, at the time of writing | 15%, since 1 April 2018 | 7.5% | 16% |
| Choosing VAT on an invoice line | 15% or 0%; the screen does not tell zero-rated and exempt apart | A tax code per line: standard, zero-rated, exempt, out of scope or reverse charge | The same tax codes as Nigeria |
Two further points apply in Nigeria and Kenya. First, the country's tax codes apply once the country pack is activated under Settings, Jurisdiction & regulators, and it is the invoice form under Accounting that follows them. The New invoice form under Billing & Finance offers only 15% or 0% and shows rand, so do not use it for Nigerian or Kenyan VAT. Second, Achekam charges standard-rate VAT on a Nigerian or Kenyan invoice only once the rate rule for that country has been approved on the platform. Until then it refuses a standard-rated line and asks you to choose a code without VAT, or to wait.
Rates change. Confirm the current rate with SARS, the NRS or KRA before relying on any figure here.
Country notes for a newly registered consultancy
- South Africa. Once registered, charge 15% on standard-rated fees and check the heading on each invoice PDF, as above.
- Nigeria. A small business is exempt from registering for, charging and filing VAT, but may opt in. If you have opted in or have grown beyond the exemption, everything in this article applies.
- Kenya. A business must apply for VAT registration within 30 days once its taxable supplies reach KES 5 million in 12 months; see section 34 of the VAT Act 2013. Every business in Kenya must also issue electronic tax invoices through KRA's eTIMS. Where automatic sending is not available, you issue the invoice through eTIMS or your provider, record the identifiers it returns in Achekam, and a second person verifies them.
A checklist for the first invoice after registration
- The VAT number is entered in Firm Profile from the date registration takes effect.
- Each invoice line carries VAT at the right rate, or the right tax code in Nigeria or Kenya.
- In Nigeria and Kenya, the invoice is raised from the Accounting form, not the Billing & Finance one.
- The PDF's heading has been checked before it is sent.
- Clients' tax numbers are on record and print correctly.
- In Kenya, the eTIMS route for the invoice is settled before it is issued.
Registration usually goes hand in hand with other changes in how clients pay you. In Nigeria and Kenya, many clients deduct withholding tax from consultancy fees, covered in when a client pays you net of withholding tax. And once VAT is in the books, the monthly figures change shape; see a monthly management pack for partners.
Before your registration date, prepare the next invoice as a draft, walk through the checklist line by line, and issue it only when every point holds.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
