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HMRC internal manual

VAT Time of supply

Tax points for specific types of supply: Continuous supplies of services: Eligible supplies

There are obvious advantages to suppliers in using regulation 90 and so it is important to ensure that it is not applied in discriminately. It is therefore necessary to distinguish something supplied for a period from, for example, a supply that takes time to complete but which culminates in a single supply. The same goes for a series of separate supplies made over a period.

In distinguishing something supplied for a period , it is important not to be influenced by the fact that the services in question involve an extended period of time.This can be illustrated as follows.

Take for example the repair of a lorry for a transport business. The vehicle is left with a garage who will normally under take the work the same day or within a couple of days. This represents a single supply of services. However, it may be the case that the transport firm takes its vehicles to the same garage for repair and servicing as required so that the garage is undertaking work for the one customer on a regular basis. Nevertheless, in the normal course of events, each repair, etc, will amount to a separate discreet supply.

Alternatively there can be a single supply of services over an extended period - for example, a consultant preparing a report. The process may take some time given the need to research the issues, followed by the drafting of the report. During that period the client is receiving little in the way of a tangible service. What the client requires is the final outcome i.e. delivery of the written report. This is when the service is performed.

With a continuous supply of services (for example the provision of telephone service) rather than an outcome, what the customer receives might be described as a recurring stream of supplies, each portion of which is significant in terms of the customer being able to use and consume them. In this case the supplies are never “completed” in the same way as the other categories are. The supply might be terminated but this is more a case of the supply ceasing rather than something finally being accomplished.

Examples of the type of supply that can meet this criteria include:

  • the services of a trustee;
  • regular or periodic maintenance work;
  • services supplied by credit card companies to retailers;
  • club membership;
  • management services;
  • agency services;
  • long-term loans or secondments of staff; and
  • hire, lease or rental of equipment.

The above list is not exhaustive and is intended for illustrative purposes only. Whether something amounts to a continuous supply of services will ultimately depend on the individual facts of the case.