Buildings, construction and land ― tax points and invoicing

Produced by Tolley
Buildings, construction and land ― tax points and invoicing

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Buildings, construction and land ― tax points and invoicing
  • Time of supply
  • What is the time of supply of single payment contracts?
  • What is the time of supply of contracts with periodic payments?
  • What are the time of supply implications of retention payments?
  • What is the tax point for a freehold sale of land or property?
  • What is the tax point of deposits for the freehold sale of land and buildings?
  • How do the tax point rules apply to leases of land and buildings?
  • Time of supply ― anti-avoidance rules for services supplied periodically
  • What is ‘occupation’ in this context?
  • More...

This guidance note discusses issues around the time of supply (tax points) and invoicing in the context of buildings, construction and land.

For the time of supply rules generally, see the Time of supply (tax points) guidance note. For invoicing more broadly, see the Tax invoice requirements guidance note.

Time of supply

The date on which VAT needs to be declared to HMRC will depend on the nature of the contract agreed with the client. However, there are a number of specific tax point rules and challenges which affect buildings, construction and land. Several of these are set out below.

What is the time of supply of single payment contracts?

Single payment contracts follow the normal tax point rules as set out in the Time of supply (tax points) guidance note.

What is the time of supply of contracts with periodic payments?

There are special rules for contracts with periodic payments when they are for the following services performed on buildings (and civil engineering works):

  1. constructing

  2. altering

  3. demolishing

  4. repairing

  5. maintaining

SI 1995/2518, reg 93

If the contract for these kinds of services contains clauses which enable the supplier to collect interim, periodic or stage payments, the tax point for the supply will be the earlier of the customer making payment or the supplier issuing a VAT invoice.

This rule also covers the work of architects, surveyors and consultants, as well as supplies of goods with the services.

There is no ‘basic tax point’ (see the Time of supply (tax points) guidance note) in respect of these types of services unless the supplier is subject to the anti-avoidance provisions outlined later in this note.

For in-depth commentary on the legislation which underpins these rules, see De Voil Indirect Tax Service V3.140D.

What are the time of supply implications of retention payments?

It is not uncommon for a clause to be inserted into a building or construction contract which allows the customer to retain a proportion of the payment due until the build has been completed

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