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HMRC internal manual

VAT Time of supply

Treatment of supplies affected by a change in VAT: VAT rate or liability: basic principles

Section 88 does not actually alter the time of supply. Any VAT due on a supply to which it applies must still be accounted for at the tax point as determined under the normal rules. What the provision does is to alter the way in which the liability of the supply may be determined.

This can be illustrated by considering the case of a supply where the tax point would normally be created by the receipt of a payment or the issue of a VAT invoice in advance of the basic tax point. It might also be created by the issue of a VAT invoice within 14 days after the basic tax point. In normal circumstances the occurrence of one of these events will require the supplier to account for VAT at the rate prevailing at that time.

The rate or the liability of that supply may, however, change so that, at the basic tax point, a different rate applies to that applicable at the actual tax point. In that event the supplier may opt to use the rate in force at the time of the basic tax point. For accounting purposes, the actual tax point will continue to apply and this will determine, for example, on which VAT return the supply is to be included. The same approach may also be applied to supplies that are covered by an extension to the 14 day rule (see VATTOS5240) or by an accommodation tax point (see VATTOS6000).

For the most part the supplies that fall within the scope of the time of supply regulations are not subject to a basic tax point. Nevertheless, for these purposes regulation 95 of the VAT Regulations 1995 (see VATTOS2390) brings them within the scope of the basic tax point rules.