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Timing your tax invoices

6th Nov 2017

When a registered person is required to issue a VAT invoice, this must be done within 30 days of the actual tax point (Reg 13(5)).

Normally, a VAT invoice only creates an Actual Tax Point if it is issued within 14 days of the basic tax point.  So, depending on the timing, the basic tax point may still apply for that supply.

This may create a problem for a taxpayer, as he may have to account for output tax much earlier than when he receives the payment. There are some solutions;

  • Use the Cash Accounting scheme. Technically, this does not change the Tax Point, but it does allow the taxpayer to account for output tax when he receives payment. Of course, he can only claim input tax when he receives payment. And the Scheme is only available if your annual taxable supplies are less than £1.35m.
  • VAT Act 1994, s6(10) provides that HMRC may allow a taxpayer to alter the tax point for supplies he makes. This is called an ‘accommodation tax point.’ The taxpayer must apply to HMRC for this. Their guidance is in VATTOS6100.
  • Reg 13(5) allows a taxpayer to delay issue of his VAT invoices. See HMRC guidance in VATREC6000.

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