Commentary

V3.140B Tax point—specified goods

Part V3 Supplies, acquisitions and imports

V3.140B Tax point—specified goods

V3.140B Tax point—specified goods

Special tax point rules are prescribed for supplies of the following:

Water, gas, power, heat, refrigeration or other cooling, or ventilation

  1.  

    (1)     water1 which comprises neither2:

  2.  
    1.  

      (a)     distilled water, deionised water or water of similar purity, nor

    2.  

      (b)     water comprised in VATA 1994, Sch 8, Group 1 excepted items 1–73, eg bottled waters

  3.  

    (2)     coal gas, water gas, producer gases or similar gases, and supplies of petroleum gases or other gaseous hydrocarbons in a gaseous state

  4.  

    (3)     power, heat, refrigeration or other cooling4, or ventilation5

General rule

A supply falling within heads 1–3 above is treated as taking place at the earlier of6:

  1.  

    (a)     the time when a payment is received in respect of the supply, or

  2.  

    (b)     the time when the supplier issues a VAT invoice in respect of the supply

A tax point under (b) is not created where the invoice in question is a self-billed invoice7.

In Enron8, the appellant (E) made and received continuous supplies of gas and electricity. In October 2001 it went into administration. It entered into a 'netting agreement' with another company (M), in respect of supplies made to and received from M. In August 2002 M made a payment of £655,000 to E's administrator (P) in respect of supplies made by E under this agreement, based on a calculation statement dated 21 February 2002. P accounted for output tax on this payment. HMRC subsequently discovered that M had reclaimed input tax of more than £6,000,000 in respect of its transactions

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