Proforma invoice vs tax invoice: which one do you need?

Two definitions to start

A proforma invoice is a document sent before a sale is completed that sets out the goods or services, prices and terms the seller expects to bill, so the buyer can approve, budget or pay in advance. A tax invoice is the formal record of a taxable sale, issued by a registered seller, that shows the tax charged.

The word “proforma” comes from Latin and means roughly “as a matter of form”. That is a useful reminder: the proforma looks like an invoice, but it is a courtesy document. It does not record a sale in your books, and in the UK it cannot be used to reclaim VAT.

You will see it spelled proforma, pro forma and pro-forma. All three mean the same document.

Proforma invoice vs tax invoice side by side

The table compares the two documents on timing, purpose, numbering, tax and bookkeeping. The core difference is that a proforma comes before the sale and carries no tax effect, while a tax invoice comes with or after the sale and is the evidence both sides use for their tax records.

When to use a proforma invoice

Use a proforma when the buyer needs a firm, invoice shaped document before the sale happens. Common reasons are paying in advance, getting internal purchase approval, arranging import paperwork or finance, and confirming exact quantities and shipping costs. If none of these apply, a quote or a normal invoice is usually simpler.

• Prepayment: you want payment before you ship or start work, and the buyer’s accounts team needs a document to pay against.
• Purchase approval: the buyer must get sign off, and a proforma with exact totals is easier to approve than a quote.
• Imports and finance: the buyer’s bank or import agent may ask for a proforma to arrange funds or permits.
• Locked details: you want both sides to agree weights, quantities, delivery terms and charges before anything moves.

HMRC describes the same use in VAT Notice 700: proformas are often used to offer goods or services, the offer may or may not be taken up, and goods or services are not supplied unless payment is received. You can make one with our proforma invoice generator.

When to issue the tax invoice

Issue the tax invoice once the sale actually happens, meaning you supply the goods or services or receive payment, whichever triggers tax where you are. HMRC says that once you supply or are paid after a proforma, you must issue a proper VAT invoice. Many countries also set a deadline for doing so.

If you only sell to customers in one country, check that country’s rule. Our guide on tax invoice rules compares ten countries in more detail.

Proforma invoice vs quote

A quote is an offer that the customer can accept or decline, often with a validity period. A proforma usually comes after the customer has said yes in principle, and it presents the deal in invoice form so they can pay or approve it. In practice, a quote opens the conversation and a proforma closes it.

A quote can be looser. It may list options, ranges or assumptions. A proforma should read like the final invoice will: exact quantities, unit prices, delivery charges, currency and payment terms. If you are still negotiating, send a quote. Our sister site WhizQuote makes free quotes in the same style as these invoices.

Where a commercial invoice fits

A commercial invoice is the export document that travels with goods crossing a border. Customs uses it to see what is being shipped, its value and where it came from. It is not the same as a proforma, which comes before shipping, and it is not always the same document as your tax invoice.

The UK government’s export guidance puts it simply: export invoices, also called commercial invoices, are essential for customs clearance. The same guidance lists related paperwork such as a proforma invoice, purchase order or sales contract, whose number and date go on the commercial invoice. So for an export, the order often runs proforma, then commercial invoice with the shipment, then your tax or sales invoice for the books.

Commercial invoices also carry customs details an ordinary invoice does not, such as commodity codes, weights and country of origin. Check the destination country’s import rules before you ship.

Worked example: from proforma to VAT invoice

Here is how a made up UK supplier, Calder Valley Linen Ltd, moves a prepaid order from proforma to VAT invoice. The order is 200 table napkins at £3.20 each plus £35.00 delivery, with VAT at the UK standard rate of 20%. The amounts match on both documents; only the status and number change.

1. 2 November 2026: proforma PF-2026-0031 sent, marked “This is not a VAT invoice”.
2. 5 November: the buyer pays £810.00.
3. 5 November: VAT invoice INV-2026-0207 issued, quoting PF-2026-0031 as a reference. Under HMRC’s rules, receiving payment is when a proper VAT invoice is needed.
4. 9 November: goods dispatched.

Prices are examples only. The proforma number stays out of the main invoice series, which keeps that series sequential.

Three ways proformas cause trouble

Most proforma problems come from treating it as a real invoice. The three to avoid are counting it as a sale, letting the buyer reclaim tax on it, and numbering it in your main invoice series. Each one creates records that do not match what actually happened, which takes time to unpick.

• Booking it as revenue. If the buyer never goes ahead, you have a sale in your books that did not happen. Record it only when the tax invoice is issued.
• Missing the “not a tax invoice” line. Without it, a buyer may file it as a tax invoice. HMRC asks for proformas to be clearly marked “this is not a VAT invoice”.
• Sharing the invoice number series. Unused proforma numbers leave gaps in your sequence. Use a separate prefix; our guide to invoice numbering shows how.

If a tax invoice was issued too early and the deal falls through, cancel it with a credit note rather than deleting it.