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HMRC internal manual

VAT Time of supply

Identifying a tax point: actual tax points

The basic tax point is always over ridden by an actual tax point (see VATTOS5000). An actual tax point can be created before or after the basic tax point. An earlier tax point arises if the supplier issues a VAT invoice or receives a payment in advance of the basic tax point. On the other hand, unless a taxpayer has elected to the contrary, the tax point is delayed where the supplier issues a VAT invoice within 14 days (or a longer period where this has been allowed) after the basic tax point.

Often there can be more than one tax point. For example a business undertakes to supply an item of furniture. The customer pays a deposit when the order is placed. Receipt of that payment creates a tax point at that time for the amount received. Under the contract, the balance of the purchase price is payable once the goods have been delivered. The tax point for the remainder of the supply then depends on the actions of the supplier. If the supplier issues a VAT invoice for the balance within 14 days after delivery of the furniture (ie the basic tax point), then it is the invoice that creates the tax point.

If the invoice is issued after 14 days, or no VAT invoice is to be issued at all because,say, the customer is a private person, then the tax point reverts to the basic tax point.In this case when the furniture was delivered. It should be noted that because payment of the balance of the purchase price occurred after the basic tax point it has no significance for time of supply purposes.