Commentary

V7.421A Supply—deposits

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.421A Supply—deposits

Part V7 Tax planning | Commentary

V7.421A Supply—deposits

The receipt of an advance payment from a customer, before a supply has taken place, usually creates a tax point for VAT purposes. This is because the payment relates to a supply of either goods or services and the receipt of money creates an actual tax point that is in advance of the basic tax point (see V7.418 above for the definition of 'basic' and 'actual' tax points).

A common problem relates to the sale of a property (where VAT is charged on the sale in most cases if the seller has made an option to tax election on the property) that involves a deposit payment being made when contracts are exchanged. The deposit will need to

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial