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HMRC internal manual

VAT Time of supply

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HM Revenue & Customs
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Actual tax points: payments: payments claimed to be held in trust

It is sometimes claimed that a payment is held in trust by a supplier until the supply is made. This was the basis of the appeal in the case of Richmond Theatre Management Ltd ([1995] STC 190) involving advance ticket sales. The company did not account for VAT until the date of the performance. In the meantime payments were said to be held in trust on behalf of the ticket-holder. This was accepted by theTribunal. The High Court overturned the decision and went on to consider the general VAT time of supply consequences of a payment held in trust. The judge did not consider that the arrangements put into place by the theatre actually amounted to holding the money in trust. But even if the theatre had succeeded in creating a trust this would still have amounted to a payment for VAT purposes.