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HMRC internal manual

VAT Time of supply

Legislation: UK secondary law (VAT Regulations 1995): Regulation 89 retention payments


89 Where any contract (other than one of a description falling within regulation 93 below) for the supply of goods (other than for a supply to which subsections (7) and (8) of section 6 of the Act apply) or for the supply of services provides for the retention of any part of the consideration by a person pending full and satisfactory performance of the contract, or any part of it, by the supplier, goods or services (as the case may require) shall be treated as separately and successively supplied at the following times -

(a) the time determined in accordance with section 6(2), (3), (4), (5), (6), (10) or (13) of the Act, as the case may require, and

(b) the earlier of the following times -

(i) the time that a payment in respect of any part of the consideration which has been retained, pursuant to the terms of the contract, is received by the supplier, or

(ii) the time that the supplier issues a VAT invoice relating to any such part.


The special rules contained in this regulation apply to the retention element of the consideration for a supply. Apart from this the supply is subject to the normal tax point rules. Also the regulation does not apply to intra-EC supplies of goods or to supplies of construction services falling within the scope of regulation 93 (see VATTOS2370).

For further information see VATTOS5170.