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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: VAT invoices: centrally agreed extensions to the 14 day rule

 

 
 
 
 
 
 
 
 
 

Introduction

There are a number of centrally agreed extensions and these are set out in the following paragraphs. Applications may still be received from individual tax payers who are already subject to one of these extensions – for example seeking a longer period in which to issue invoices to that already agreed centrally. These may be approved provided you are satisfied that they are justified and will not lead to the problems associated with receipt of payments during the intervening period (see VATTOS5240).

The British Electrical and Allied Manufacturers Association/TheScientific Instruments Manufacturers Association/The Electronic Engineering Association

Members of these associations have been granted the following extension in respect of goods or services supplied to Government Departments (including the Post Office):

If the consideration for a supply of goods or services made by member companies of the above Associations under a Government contract is not ascertained or ascertainable at or before the time when the goods are removed or the services are performed, the supply may be treated as taking place at the time when the member issues a VAT invoice in respect of it provided that the invoice is issued not later than one year after the date of removal or performance.

Government Contracts

Accounting procedures by Government Departments can delay the submission of contractor’s invoices. The following general extension has therefore been granted to all taxable persons making supplies for an agreed or provisional price to Government Departments (including the Post Office and quasi-Government Departments):

Where a taxable person supplies goods or services for an agreed price under a Government contract and the supplier’s invoicing is delayed due to Government procedures, for example the use of Ministry of Defence Form 640, the supply may be treated as taking place at the time when the supplier issues a VAT invoice in respect of it, provided that the invoice is issued not later than 4 months after the date of removal of the goods or performance of the services.

Local Authorities - The Institute of Municipal Treasurers andAccountants

The majority of taxable supplies made by local authorities are cash sales accounted for under a retail scheme. In the case of invoiced supplies local authorities, for various reasons connected with their status, often have difficulty in issuing invoices within 14 days. The following general extension has therefore been agreed:

Where a local authority supplies taxable goods or services in the course of business activities the supply may be treated as taking place at the time when the local authority issues a VAT invoice in respect of it, provided that the invoice is issued not later than 2 months after the date of removal of the goods or performance of the services.

Patent Agents - The Chartered Institute of Patent Agents

Patent agents are frequently required to engage the services of other professional persons and suppliers in the course of making supplies to their clients. The patent agent is seldom in a position to issue an invoice to the client within 14 days after completion of the services and the following general extension has therefore been allowed:

If the consideration for a supply of services by a patent agent is not ascertained or ascertainable at or before the time when the services are performed, the supply may be treated as taking place at the time when the patent agent issues a VAT invoice in respect of it, provided that the VAT invoice is issued not later than 3 months after the date of performance of the service.

Scrap metal - Reclamation Industries Council

Scrap metal is often supplied by scrap metal dealers on ‘material on valuation’ terms. This means that the dealer has to await notification of the value from the customer and cannot normally issue an invoice within 14 days of removal of the material. The following extension has therefore been granted to members of the industry:

As the consideration for a supply of material on valuation in the scrap metal trade is not ascertained or ascertainable at or before the time when the goods are removed, the supply may be treated as taking place at the time when the supplier issues a VAT invoice in respect of it provided that the invoice is issued not later than 3 months after the date of removal.

The Society of British Aerospace Companies Ltd (SBAC)

Some of the supplies in the aerospace industry by members of SBAC are made under terms that allow for the price of those supplies to be subject to negotiation and agreement after the work has been completed. The following extension has therefore been granted to members of SBAC:

If the consideration for a supply of goods or services made by member companies of the Society of British Aerospace Companies Limited is not ascertained or ascertainable at or before the time when the goods are removed or the services are performed, the supply may be treated as taking place at the time when the member issues a VAT invoice in respect of it provided that the invoice is issued not later than 6 months after the date of removal or performance, or in the case of supplies made under a Government contract not later than one year after the date of removal or performance.

Note: Similar extensions may be granted to other businesses in the aerospace industry who make supplies under similar terms but who are not members of SBAC.

Solicitors - The Law Society

The procedure for drawing up solicitor’s bills is such that most solicitors are unable to issue an invoice within 14 days after the date of completion of their services.The following general extension has therefore been granted to all VAT registered solicitors:

If the consideration for a supply of services by a solicitor is not ascertained or ascertainable at or before the time when the services are performed, the supply may be treated as taking place at the time when the solicitor issues a VAT invoice in respect of it provided that the VAT invoice is issued not later than 3 months after the date of performance of the services.

Note: See VATTOS8500 for further guidance on tax points for supplies made by solicitors.