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HMRC internal manual

VAT Time of supply

Basic tax points: introduction

The basic tax point rules for goods are set out in section 6(2) of the VAT Act 1994 (see VATTOS2215) and, for services in section 6(3) (see VATTOS2220). In practice most supplies are subject to an actual tax point created by the issue of a VAT invoice or receipt of a payment (or a combination of both). The basic tax point is nevertheless still important as it plays a pivotal role in determining the legal basis for an actual tax point. For example, payments received and VAT invoices issued before the basic tax point are covered by section 6(4) (see VATTOS2225), whilst VAT invoices issued after the basic tax point fall within the scope of section 6(5) (see VATTOS2230).

Also, if for some reason an invoice is not issued or payment is not received, or they are delayed, the time of supply will, in many cases, revert to the basic tax point. It is important to remember that this does not normally apply to supplies covered by the VAT regulations which, in most cases, have the effect of dis-applying the basic tax point rules. For example the tax point for a supply of telephone services covered by regulation 90 of the VAT Regulations 1995 (see VATTOS2355) can only ever be the earlier of the issue of a VAT invoice or receipt of a payment. There is no basic tax point even if the supplies cease.