Self-billing is the term used to describe the circumstances in which the customer rather than the supplier prepares the supplier's VAT invoice. A self-billed invoice represents the customer's evidence for input tax recovery.
Since the supplier remains liable to account for output tax on the supply, a copy of the invoice must be sent to the supplier. This invoice must contain the words ‘SELF-BILLING’ and should also include a statement such as ‘the VAT shown is your output tax which is due to HMRC’.
The customer must keep an up-to-date record of its suppliers so that it does not inadvertently issue an invoice in respect of an unregistered supplier.
Self-billing in normally used where the customer is in a better position to ascertain the value of the supply than the supplier, for example in respect of payments of commission on sales, or authors’ royalties.
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