Accommodation tax points: Ministry of Defence contractors: background
There can be considerable delays in the Ministry of Defence agreeing contract prices for supplies it receives from defence industry contractors. In extreme cases this can take a number of years from the time the goods were delivered or the services performed. This creates obvious difficulties for the contractor when it comes to complying with the normal time of supply rules.
In some cases one of the centrally agreed extensions to the 14 day rule (see VATTOS5245) may provide an adequate solution. But some contractors may be subject to longer delays than those allowed for by the central agreements. If you are satisfied that the claims are genuine and that the difficulties are wholly as a result of delays on the part of the MoD, the business can be invited to apply for an accommodation tax point in the form set out at VATTOS6520.
Similar difficulties can arise in the case of supplies made by sub-contractors to the main contractor engaged on a MoD contract. Further guidance should be sought from Place &Time of Supply Team if you come across a case in which the sub-contractor claims to besimilarly affected by MOD delays in agreeing the price of the supplies made by the main contractor.