Self Billing - Subcontractor

 

Hi all,

Please help as I'm going around in circles with this one.

I'm working for a company who carry out subcontract work on behalf of a main contractor and the main contractor is self billing.  I'm happy that the self billing agreement etc is correctly in place but I'm stumped with the VAT tax point and also how to record self billing on non construction software.

The VAT office told me that the VAT tax point for self billing is when the supply takes place and not when the money is received ie what normally happens, BUT I seem to think that in construction staged payments the tax point in self billing is when the payment is received? Am I correct?

Secondly, how do I record a self billing invoice on Sage to get it in the correct month for turnover etc when I don't actually raise an invoice.  Do I journal turnover in using a Self Billing Control account, but this won't show on my debtors or do I just raise, but not send, an invoice without VAT and once payment is received raise an additional invoice for VAT only and clear the 2 invoices?

 

Any help would be appreciated.

 

Many thanks

Kate Bevan

Comments
Ioan's picture

We do an application for

Ioan | | Permalink

We do an application for payment without VAT in the month work was carried out and do a batch invoice on sage for VAT only when payment is made.

jimeth's picture

Self Billing VAT Rules

jimeth | | Permalink

For the general rules on Self Billing VAT see VAT notice 700/62.  Section 5 of that notice deals with Tax Points.  However, for construction work you should also see VAT notice 708.  Sections 23 and 24 deal with special tax point rules for construction.

My understanding is that for self billing in construction, where the contract is for periodic payments rather than a single payment, the tax point arises on payment - since the self billing invoice does not of itself create a tax point.

Self Billing Subcontractor

Wolly | | Permalink

It may be worth getting a second opinion from the VAT office and ask for the response they give to be checked as I have had problems with questions regarding the VAT and the construction industry in the past. Their answers are not always correct first time.

I have been paying self billing for the past 14 years and in that time have always been told the tax point is the date payment is recieved by the subcontactor, in fact our certificates to the sub contactor show the date we send the payment out, a theoretical tax point when we hope the subcontractor recieves the payment filled in by us, and an actual date recieved by the subcontactor to be filled in by them which states that this is the tax point date. These certificates have been approved by HMRC so the information regarding tax point dates should be correct.

Regarding your software as sated above it may be best to issue an application and raise an invoice showing all details including retentions, CITB and tax deducted (if any) and VAT which can then be entered on your system to create the correct tax point.

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