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HMRC internal manual

VAT Traders’ Records Manual

From
HM Revenue & Customs
Updated
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Other Invoicing arrangements: Self-billing: Tax points and self-billing

Issuing a self-billed invoice cannot create a tax point, except where it is issued within 14 days of the basic tax point, or within such longer period as the Commissioners may allow under the VAT Act. Further guidance and the legal background to this are explained in VATTOS3600 One consequence of this is that self-billed supplies for which there is no basic tax point (for example, continuous supplies of services, or supplies in the construction industry subject to regulation 90, 90A and 90B of the VAT regulations 1995) can only have a payment tax point.

Because of this, special arrangements have been agreed with the construction industry that provide the issuer of the self-billed invoice with a “notional tax point” for input tax deduction purposes. See VATTOS manual for an explanation of this and for a description of the procedures to be adopted where this concession is allowed. For all other purposes the tax point for the supply remains the date of receipt of the payment by the supplier.

Although the notional tax point concession was agreed with the construction industry specifically, there is no objection to its being adopted by other self-billers who have no tax point ahead of payment. However, the arrangement is a facilitation measure and should only be allowed if you are satisfied that there will be no significant delay between the recovery of input tax and the payment of suppliers. The concession can be withdrawn if there is evidence of such abuse.

If you wish to disapply the concession, you should write to the self-biller giving reasons for the withdrawal of the notional tax point and requiring him to revert to the normal rules and recover input tax only when his supplier receives payment.

Note: this notional tax point arrangement only applies where there is no basic tax point for the supply. See VATTOS3500