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HMRC internal manual

VAT Time of supply

Treatment of supplies affected by a change in VAT: place of supply

Place of supply of services

Section 97A of the VAT Act 1994 (see VATTOS2290) applies whenever there is a change which result in the place of supply of any services moving to the UK. This provision does not directly alter or amend the normal time of supply rules. Instead, for defined supplies it alters the time payments are to be regarded as received for time of supply purposes. Thus pre payments for supplies to be made after any change are deemed to be received on the effective date of the change and payments received after any change, in respect of supplies made before hand, are deemed to have been received before the change. There is also provision for apportionment in the case of payments for supplies spanning the date of any change.

There is also a provision within section 97A that disregards the effect, for time of supply purposes, of any invoices or other documents issued before the effective date of any change. In the normal course of events their issue would not create a tax point underthe normal rules since they would not be VAT invoices. Nevertheless this has been included to pre-empt any unanticipated attempts at forestalling.


(The following is of historic interest only but is included because the relevant law remains in force.)

Specific anti-forestalling measures were put in place at the time of the 1997 change in the place of supply of telecommunications. These were to prevent attempts to avoid, or delay, the effects of the change by, for example, pre-paying for future supplies. In the case of domestic supplies this was achieved by the addition of regulations 90(4) and (5),90A and 90B to the VAT Regulations 1995 (see VATTOS2355). For supplies subject to the reverse charge procedures, the effect of regulation 82 (see VATTOS2320) was modified by the Value Added Tax (Reverse Charge)(Anti-avoidance) Order (SI 1997/1523).

The effect in both cases was to ensure that supplies were taxed in the UK to the extent that they were performed in the UK after 1997and were not already subject to taxation in another Member State. Thus, for example, payments (which would otherwise have created tax points under regulations 82 or 90) were excluded from the scope of those regulations to the extent that they were received after 1997 and were in respect of supplies performed before the change. On the other hand supplies paid for in advance of their performance after 1997, were treated as supplied in 1997 unless they had been subject to VAT in another Member State.