When transactions take place for VAT purposes

The time of supply, often referred to as the tax point, is the date when a transaction takes place for VAT purposes. This date is not necessarily the date the supply physically takes place. Generally, you must pay or reclaim VAT in the VAT period (usually quarterly) in which the time of supply occurs, and use the correct rate of VAT in force on that date. This means you'll need to know the time of supply for every transaction, so you can put it on the right VAT Return.

This guide explains when transactions take place for VAT purposes. It also includes links to more information about the time of supply in certain special situations.

On this page:

How the time of supply affects working out your VAT

Every transaction has what's known as a time of supply - the date on which the transaction is considered to take place for VAT purposes. This date is often called the tax point. The time of supply depends on various things - there are some special situations when the time of supply is different from the date that you might expect.

These are some of the reasons why the time of supply is important to you if you are registered for VAT:

  • when you sell, you need to put it on any VAT invoices you issue, where it is usually called the tax point
  • when you buy, you need to check the tax point on VAT receipts you get from your suppliers - you can't assume they've put the right date
  • you need to enter your sales and purchases in your VAT account for the right date
  • it can affect what VAT rate you need to charge or claim back if there has been a rate change
  • you need to know which VAT period a transaction belongs in so you can put it on the right VAT Return
  • if you are newly registered for VAT, you need to know whether transactions took place before or after your registration
  • when are you calculating your annual turnover for VAT registration or deregistration purposes, you need to know what year to include transactions in
  • you need to take the time of supply into account if you are partially exempt and you are making your partial exemption calculations

Sometimes, one sale can give rise to two or more tax points - for example, where the customer pays a deposit in advance, and then a final payment.

Find out more about tax points for deposit sales

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Time of supply for goods and services

The time of supply (tax point) for VAT purposes is defined as follows:

  • For transactions where no VAT invoice is issued (for example, sales to customers who aren't registered for VAT) - the time of supply is normally the date the supply physically takes place (as defined below).
  • For transactions where there is a VAT invoice - the time of supply is normally the date of the invoice, even if this is before or after the date the supply physically took place (as defined below).

However, see the exceptions detailed below.

Date the supply physically takes place

For goods, the time when the goods are considered to be supplied for VAT purposes is the date when one of these happens:

  • the supplier sends the goods to the customer
  • the customer collects the goods from the supplier
  • the goods (which are not either sent or collected) are made available for the customer to use - for example, if the supplier is assembling something on the customer's premises

For services, the date when the services are considered to be supplied for VAT purposes is the date when the service is carried out and all the work - except invoicing - is finished.

Exceptions

The above general principles for working out the time of supply do not apply in the following situations:

  • For transactions where a VAT invoice is issued and payment is received in advance, the time of supply is the date the payment is received or the date the invoice is issued - whichever is the earlier.
  • If the supplier receives full payment before the date when the supply takes place and no VAT invoice has yet been issued, the time of supply is the date the payment is received.
  • If the supplier receives part payment before the date when the supply takes place. The time of supply becomes the date the part-payment is received (assuming no VAT invoice has been issued before this date - in which case the time of supply is the date the invoice is issued) - but only for the amount of the payment. The time of supply for the remainder will follow the normal rules - and might fall in a different VAT period, and so have to go onto a different VAT Return.
  • If the supplier issues a VAT invoice more than 14 days after the date when the supply took place, the time of supply will be the date the supply took place, and not the date the invoice is issued. However, if a supplier has genuine commercial difficulties in invoicing within 14 days of the supply taking place, they can contact HMRC to ask whether they can have permission to issue invoices later than 14 days and move the time of supply to this later date.

Exceptions for certain trade sectors and specific types of transaction

There are special rules for working out the time of supply for certain trade sectors, and certain specific types of transaction and also some special schemes that alter the time at which VAT is accounted for. The section in this guide on specific situations and sectors has links to technical information on :

  • situations where either the payment or the supply is spread over a period of time or more than one occasion - such as continuous supplies, royalties, credit sales, vending machines, sale-or-return, etc
  • situations where the supply is not a sale - such as self-supply, or items taken for personal or business use
  • certain trade sectors including barristers, building and construction, and land and property
  • users of the Cash Accounting Scheme, Tour Operators' Margin Scheme or a retail scheme
  • imported services

More about the time of supply in VAT Notice 700

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Examples of time of supply

Examples of time of supply (tax point) for transactions when a VAT invoice is issued
Date invoice is issued Time of supply (tax point) Effect of full advance payment
Before the date the supply takes place The date the invoice is issued If payment is received before the invoice is issued, time of supply (tax point) is the date payment received
On the same day that the supply takes place The date the invoice is issued If payment is received before the invoice is issued, time of supply (tax point) is the date payment received
Between 1 and 14 days after the date the supply takes place The date the invoice is issued If payment is received before the date the supply takes place, the time of supply (tax point) is the date payment received
15 or more days after the date the supply takes place The date the supply takes place (unless the supplier has permission from HMRC to move the time of supply to more than 14 days afterwards - in which case it will be the date of the invoice) If payment is received before the date the supply takes place, the time of supply (tax point) is the date payment received
Examples of time of supply for transactions when no VAT invoice is issued
Date full payment received Time of supply
Before the date the supply takes place The date the payment is received
On the day when the supply takes place The date the supply takes place
After the date when the supply takes place The date the supply takes place

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Pro-forma invoices

If you need to issue a sales document for goods or services you haven't supplied yet, you can issue a 'pro-forma' invoice or a similar document to offer goods or services to customers.

A pro-forma invoice is not a VAT invoice, and you should clearly mark it as such with the words 'This is not a VAT invoice'.

If your potential customer accepts the goods or services you're offering them and if you actually supply them, or the customer makes a payment, then a transaction has taken place for VAT purposes and, if your customer is registered for VAT, you'll need to issue a VAT invoice.

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Specific situations and sectors

There are different rules for working out the time of supply in certain specific situations. Sometimes these rules apply to certain types of goods or services, and sometimes they apply to particular types of business.

Special rules apply to the following:

Trade sectors

VAT accounting schemes

International trade

Continuous, staged or delayed supplies or payments

Self-supply and own use

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VAT rate changes

At the time of a VAT rate change, suppliers can choose to use the rate in force on the date the supply physically takes place under the normal time of supply rules (see above), even though a different rate might apply at the time of supply (tax point), for example because the time of supply has been changed to a different date by a payment in advance or the issuing of a VAT invoice. They can also do this when the liability of a particular product or service changes - for example, because a product or service that was standard-rated becomes reduced-rated.

These special provisions do not change the time of supply. Both supplier and customer must still account for VAT at the time of supply using the rules in the rest of this guide.

In the event of a VAT rate increase suppliers might want to use the special provisions so they can charge the lower rate of VAT on a supply that takes place before the rate increase, but the time of supply occurs afterwards when the VAT invoice is issued.

In the event of a VAT rate decrease suppliers might want to use the special provisions so they can charge the lower rate of VAT on a supply that takes place after the rate decrease, but where the time of supply occurred beforehand when a payment was received or a VAT invoice was issued.

More about what to do when the VAT rate changes

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More useful links

Read about how to keep records and account for VAT

Read about VAT and International Trade

Find out more about the Construction Industry Scheme

More about tax points in the building and construction industry in VAT Notice 708

Find out what a VAT invoice has to show and when it has to be issued

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