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HMRC internal manual

VAT Time of supply

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HM Revenue & Customs
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Accommodation tax points: Assigned debts

 
 
 
 

Background

Regulation 94A of the VAT Regulations 1995 (see VATTOS2380) applies to payment tax points arising under one of the time of supply regulations (see VATTOS2300).

It confirms that payments are to be treated as having been received by the supplier despite the payment being made to another person to whom the right to receive it has been assigned. This can occur, for example, as part of a factoring agreement.

In many cases the assignee will, as a matter of course, notify the supplier of amounts received from the latter’s customers, in which case the supplier should have no difficulty in complying with the normal payment tax point rules. Alternatively, a tax point may have already have been created prior to assignment by the issue of a VAT invoice.

But in some circumstances, whether it be for reasons of commercial confidentiality or practical difficulty, the supplier may not be informed of subsequent payments and will therefore be unaware when a payment tax point has occurred.

Suppliers affected in this way can, if they wish, apply for an accommodation tax point under section 6(10)(a) of the VAT Act 1994 (see VATTOS2245) to bring forward the tax point to the time of assignment. Any outstanding VAT due against the amount assigned is required to be accounted for at that time. Those wishing to adopt this should be invited to apply in the form set out below. The application should be made using the normal business letterhead and is to be signed by the usual signatory to the VAT return. An application on behalf of a VAT group member is to be made by the representative member. Satisfactory applications may be authorised locally by the issue of a Notice of Direction in the form set out below. A copy of the direction should be retained on EF.

Form of application

VALUE ADDED TAX - APPLICATION FOR A DIRECTION UNDER SECTION 6(10)(a) OF THE VAT ACT 1994

I/We request that supplies of [insert details of supplies] by [insert company or business name] where the right to receive the consideration for those supplies is assigned to another person shall, to the extent of the amount assigned, be treated as taking place on the date of assignment, provided such date is earlier than would otherwise apply.

I/We further request that, on the issue of the direction, any existing direction which might otherwise apply to such supplies will cease to have effect insofar as it applies to the above mentioned supplies.

Signed (normal signatory to VAT return):

Status of signatory:

Name of company or business:

Address:

VAT registration no:

Form of direction

To: (Name and address of applicant)

VALUE ADDED TAX - DIRECTION UNDER SECTION 6(10)(a) OF THE VALUE ADDED TAX ACT 1994.

In exercise of their powers under section 6(10)(a) of the Value Added Tax Act 1994, the Commissioners for Her Majesty’s Revenue & Customs hereby direct that for supplies by you of [insert details] where the right to receive the consideration for those supplies is assigned to another person shall, to the extent to the amount assigned, be treated as taking place on the date of assignment, provided such date is earlier than would otherwise apply.

This direction replaces any existing direction to the extent that the existing direction applies to the above mentioned supplies and will remain in force until you request otherwise or it is revoked.

Date:

Signature:

For and on behalf of the Commissioners for Her Majesty’s Revenue & Customs