Construction industry – invoice, tax point requirements and anti-avoidance

By Tolley
VAT_tax_img

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Construction industry – invoice, tax point requirements and anti-avoidance
  • Time of supply
  • Self-billing
  • Authenticated receipts
  • Anti-avoidance provisions
  • Self-supply of construction services
  • Reverse charge - building and construction services

This guidance note provides an overview of the types of invoices that can be issued in respect of construction contracts and when VAT needs to be declared to HMRC.

Time of supply

The date upon which VAT needs to be declared to HMRC will depend on the nature of the contract agreed with the client. See also the Time of supply (tax points) guidance note.

HMRC Notice 708 
Services – single payment contracts

If the contract states that the customer will make a single payment for the services supplied, the following rules will apply.

The basic tax point is the date the services are completed. If the business issues a tax invoice or receives payment before the services are completed, VAT will be due on the earlier of these two events.

If the business has not received payment, or issued an invoice before the basic tax point is created and the business issues a tax invoice within 14 days of the basic tax point, VAT will be due on the date of issue of the invoice. It should be noted that if the invoice is issued more than 14 days after the basic tax point, the business can choose to either use the basic tax point or the date of issue of the invoice as the date it includes the amount on its VAT return. The different dates will only have an impact if the basic tax point and invoice date are in two separate VAT return reporting periods.

Services – contracts with periodic payments

If the contract contains clauses which enable the supplier to collect interim, periodic or stage payments in respect of services (ie architects / surveyors / consultants, etc) or supplying services with goods, the tax point for the retention payment will be the earlier of

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