Produced by Tolley

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

  • Self-billing
  • What is self-billing?
  • Considerations
  • Self-billing agreements
  • Reviewing agreements
  • Conditions for issuing a self-billed invoice
  • VAT invoice requirements
  • Third party providers
  • Correcting errors
  • Breaching the self-billing rules
  • More...


This guidance note provides an overview of the rules relating to self-billing arrangements.

What is self-billing?

Self-billing is a commercial arrangement between a customer and a supplier under which the customer prepares the invoice on behalf of the supplier and forwards a copy of that invoice to the supplier. The supplier remains responsible for payment of the output tax due. Self-billing is commonly used where the customer is in a better position to know what has been supplied under the contract and the tax point. A typical example is where the customer holds call off stock at its premises and raises a self-billed invoice when it removes stock from the warehouse.

A customer can issue a self-billed invoice if the following conditions are met:

  1. the supplier has agreed to accept self-billed invoices

  2. the customer and supplier have a self-billing agreement in place

  3. the customer using self-billing meets the conditions explained below


Businesses that agree to use self-billing must ensure that they consider the following points:

  1. the customer can only recover the VAT charged on the self-billed invoice if all of the conditions outlined in this guidance note are satisfied

  2. the customer is responsible for ensuring that the VAT treatment of the transaction is correct (although the supplier should also check when they receive a copy of the self-billed invoice as they still pay the output tax due to HMRC)

  3. both parties must agree to use self-billing and an agreement must be signed before any invoices are issued

  4. if the customer is raising electronic self-billed invoices to a large number of suppliers it must ensure that its accounting systems are able to deal with the requirements ― see the Electronic invoicing guidance note for more information

VAT Notice 700/62, para 2.2

Self-billing agreements

It should be noted that if the parties are entering into a business contract, the self-billing arrangements can be included as part of the overall contractual terms agreed with the parties. The self-billing agreement is deemed to last

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