In this section:
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.
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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:
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
The time of supply (tax point) for VAT purposes is defined as follows:
However, see the exceptions detailed below.
For goods, the time when the goods are considered to be supplied for VAT purposes is the date when one of these happens:
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.
The above general principles for working out the time of supply do not apply in the following situations:
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 :
More about the time of supply in VAT Notice 700
| 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 |
| 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 |
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.
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:
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
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
