Value Added Tax

Time of supply (tax points)

Produced by Tolley
  • 21 Dec 2021 16:45

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

  • Time of supply (tax points)
  • Why are tax points important?
  • When are tax points created?
  • The basic tax point
  • Actual tax points
  • Payments received and no VAT invoice is issued
  • 14-day rule
  • Extension to the 14-day rule
  • Accommodation tax point
  • What is the tax point for continuous supplies of services?
  • More...

Time of supply (tax points)

This guidance note provides an overview of the main tax point rules for goods and services.

Why are tax points important?

The tax point determines the date upon which a business is required to account for output tax to HMRC and it is also the point at which input tax can be recovered by the customer. The tax point rules for goods and services are different and special rules apply to certain types of supply and care needs to be taken to ensure that the correct rules are applied.

Failure to account for output tax in the correct VAT return period can result in the imposition of interest and possibly penalties if the business is deemed to be careless or deliberate when failing to account for VAT correctly, see the Penalties for inaccuracies in returns ― overview guidance note.

The tax point also helps to determine the date that a business exceeded the VAT registration threshold and is required to register for VAT; it can also help to determine whether a business is still required to be VAT registered. See the VAT registration and deregistration ― overview guidance note.

When are tax points created?

It should be noted that there can be more than one tax point created in relation to a supply; for example, if the customer pays a deposit before the goods / services are supplied. This is deemed to be an advance payment and VAT will be due on the amount of the deposit.

It should be noted

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