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HMRC internal manual

VAT Time of supply

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HM Revenue & Customs
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Legislation: UK secondary law (VAT Regulations 1995): Regulations 90, 90A and 90B continuous supplies of services

Law

90(1) Subject to paragraph (2) below, where services, except those to which regulation 93 applies, are supplied for a period for a consideration the whole or part of which is determined or payable periodically or from time to time, they shall be treated as separately and successively supplied at the earlier of the following times-

(a) each time that a payment in respect of the supplies is received by the supplier, or

(b) each time that the supplier issues a VAT invoice relating to the supplies.

(2) Where separate and successive supplies of services as described in paragraph (1) above are made under an agreement which provides for successive payments, and the supplier at or about the beginning of any period not exceeding one year, issues a VAT invoice containing, in addition to the particulars specified in regulation 14, the following particulars-

(a) the dates on which payments under the agreement are to become due in the period,

(b) the amount payable (excluding VAT) on each such date, and

(c) the rate of VAT in force at the time of issue of the VAT invoice and the amount of VAT chargeable in accordance with that rate on each of such payments,

services shall be treated as separately and successively supplied each time that a payment in respect of them becomes due or is received by the supplier, whichever is the earlier.

(3) Where, on or before any of the dates that a payment is due as stated on an invoice issued as described in paragraph (2) above, there is a change in the VAT chargeable on supplies of the description to which the invoice relates, that invoice shall cease to be treated as a VAT invoice in respect of any such supplies for which payments are due after the change (and not received before the change).

(4) This regulation shall not apply to any relevant services -

(a) where the period to which a payment falling within paragraph (1), (2) or (3) above relates, ends before 1st July 1997; or

(b) which are treated as supplied on 1st July 1997 by virtue of regulation 90A below.

(5) In this regulation and in regulation 90A and 90B below, “relevant services” means services within the description contained in paragraph 7A of Schedule 5 to the Act which are treated as supplied in the United Kingdom by virtue of article 18 of the Value Added Tax (Place of Supply of Services) Order 1992.

90A Where -

(a) relevant services are supplied for a period for a consideration the whole or part of which is determined or payable periodically or from time to time;

(b) the period covered by the payment referred to in sub-paragraph (c) below ends on or after 1st July 1997; and

(c) a payment in respect of the services was made before 1st July 1997,

the services shall be treated as supplied on 1st July 1997.

90B Where relevant services are treated as supplied on or after 1st July 1997 by virtue of regulation 90 or 90A above, the supply shall be treated as taking place only to the extent covered by the lower of -

(a) the payment; and

(b) so much of the payment as is properly attributable to such part of the period covered by the payment as falls after 30th June 1997.

Commentary

This is perhaps the most familiar and frequently used of the time of supply regulations. It applies to supplies of services that are continuous in nature. That is to say services provided on an ongoing basis, as opposed to a series of single supplies or a single supply undertaken over a period of time. One of the difficulties often associated with this regulation is in deciding whether a particular supply actually falls within its scope. Like regulations 85 and 86, regulation 90 also allows for “period” VAT invoicing (see VATTOS5220). This allows for the issue of a single VAT invoice covering all the payments or instalments that are due in respect of the supply over a period not exceeding a year. For further information about continuous supplies of services see VATTOS9150.

Paragraphs (4) and (5) and regulations 90A and 90B were added in connection with a change in the place of supply of telecommunication services. Where, after 1 July 1997, certain supplies affected by the change were to be treated as performed in the UK, these new provisions were introduced to ensure that they became liable to UK VAT subject only to their not having already been taxed in another Member State. Apart from this specific historical application these provisions have no impact on the normal application of regulation 90. For further information see VATTOS7300.