TAX POINT: A VAT tax point is also known as the ‘time of supply‘.
It is the date at which a business transaction takes place for the purpose of Value Added Tax.
Understanding when to apply the tax point is important because:
- It is the date recorded on most VAT invoices.
- It shows which VAT period the transaction applies to.
- It determines which VAT Return the transaction belongs to.
The date of supply is different for goods and services. For goods it can be the date sent, collected, or made available for use. For services the time of supply would be the date the work gets completed.
Note: Even though the exact tax point can vary, the following rules apply to most circumstances.
| Invoice Situation for Value Added Tax Purposes | VAT Tax Point Recorded |
|---|---|
| No invoice Required | Use the date of supply for the tax point |
| Invoice issued for Value Added Tax | Use the date of the invoice as the tax point |
| Invoice issued for VAT 15 days or more after the supply date | Use the date that the supply occurred |
| The invoice or payment got issued in advance of the supply | Use the date of invoice or payment (use the earliest) |
| Payment came in advance of the supply and no VAT invoice got issued at that time | Use the date that you received the payment |
Tax Point Exceptions
When using the VAT Cash Accounting Scheme the tax point will always be the day the payment gets received.
Some tax point rules have different applications for certain trades. These include the construction industry and barristers. Read VAT guide (VAT Notice 700) for further guidance.
The different rules also apply to situations where the supply is not ‘technically’ a sale. An example would be when business items get used for your own personal use.
Note: A single sale of a product or service can have multiple VAT tax points. This can happen when a customer pays a deposit followed by a final payment. It can also apply if a customer pays at different phases during the completion of a project.