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HMRC internal manual

VAT Time of supply

Tax points for specific categories of supplier: accountants




Supplies made by accountants consist almost exclusively of services. These may be either continuous or single supplies. It is this distinction that normally determines the tax point rules that will apply.

Continuous supplies

The traditional accountancy activities, carried out on an on-going basis for individual clients, can normally be accepted as representing a continuous supply of services. This includes such work as maintaining a client’s accounting records, providing day-to-day accountancy advice, audit work and the submission of annual accounts to HMRC. Where some or all of this type of work is undertaken on a continuing basis for the same client, the supply will fall within the scope of regulation 90 of the VAT Regulations 1995 (see VATTOS2355). This means that the tax point is the earlier of the issue of a VAT invoice or the receipt of a payment.

It is the practice of some accountancy firms to initially bill their clients in a form that does not amount to the issue of a VAT invoice. Where this occurs a tax point will not occur until receipt of payment of the fees. Under the normal VAT invoicing rules the accountant is still required to issue a VAT invoice to VAT registered clients within 30 days of the receipt of the payment.

For further information on continuous supplies of services see VATTOS9150.

Single supplies

Certain categories of accountancy work must be treated as a single supply of services.This includes specific management projects, receivership, liquidation and other work essentially of a one-off nature (for example an accountant providing specialist advice to another firm of accountants). Single supplies of services are subject to the normal tax point rules. This means, amongst other things, the creation of a basic tax point when the work has been completed. In some cases this can be difficult to determine and can be one of the occasions when you will need to be guided by the accountant’s own judgement, provided what is claimed is reasonable.

Some supplies, although amounting to single supplies, can nevertheless be undertaken over an extended period of time. The status of the supply is not altered even where, for example, payments are received as the work progresses. Interim payments of this kind will create tax points in advance of the basic tax point.

In some cases an accountant may make additional supplies to existing clients which in their own right are intrinsically one-off in nature. Nevertheless, provided the rest ofthe accountant’s supplies to that client are continuous, the additional supplies maybe treated as an additional element of the overall continuous supply.

Extensions to the 14 day rule

Any continuous supplies made by an accountant are not subject to the 14 day rule. A need to extend the 14 day rule should therefore not normally arise. Further more, any problems in complying with the 14 day rule for one-off supplies are more likely to be a question of inconvenience rather than genuine difficulty. Any application should be considered individually on its merits, but should not normally be allowed unless justified by factors genuinely outside the accountant’s control.

Client accounts

There is little scope for payments intended to form part of the consideration for a supply, to be received in circumstances that prevent their being regarded as payment for VAT purposes. Accountancy bodies recommend that their members maintain client accounts, in much the same way that solicitors are required by law to maintain accounts that are kept entirely separate from the normal business accounts. Payments received into an accountant’s client account may be disregarded in circumstances where the money remains the property of the client and is held on behalf of the client. This may include, for example, amounts to be used to pay a client’s tax liabilities, pension contributions, insurance premiums, etc, or proceeds from the sale of a client’s shares.