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.
Self-billing may only be used with the agreement of both the supplier and the customer and both the supplier and customer must be VAT registered.
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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