V3.131 Tax point—introduction

The time of supply (tax point)

V3.131 Tax point—introduction

VAT charged on the supply of goods and services becomes due at the time of supply1. The actual time of supply may be difficult to determine in many cases, and the legislation therefore sets out a comprehensive set of rules for determining when a supply of goods or services is treated as taking place for the purposes of charging tax2. The time when a supply is treated as taking place in accordance with these rules is referred to by HMRC as the 'tax point'3, and the same terminology is adopted in this work. The time when it actually takes place, insofar as a definitive time can be determined, is referred to here as the 'actual time of supply'4.

Since tax is charged when a tax point occurs, the concept of the actual time of supply is largely irrelevant. There appear to be only two exceptions to this general principle:

  1.  

    •     The situation can arise where a tax point arises in respect of a supply which does not, and may never, take place. For example, a customer may be invoiced for goods which are not in stock and which are never manufactured by the person who issues the invoice. It has been held that the tax point rules do not bring into existence a supply which does not otherwise exist5.

  2.  

    •     The purpose of the tax point rules is to fix the time at which a supply is deemed to take place

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