A UK VAT-registered supplier delivers goods to a business customer on 20 March, creating a basic tax point on that date, and then issues a VAT invoice on 28 March. Under HMRC's time of supply rules in VAT Notice 700, what is the actual tax point for this supply?
- 20 March, because the basic tax point can never be overridden regardless of when the invoice is issued
- The date the customer actually pays for the goods, because tax points are always set by receipt of payment
- 28 March, because issuing a VAT invoice within 14 days of the basic tax point creates a later actual tax point on the invoice date
- The end of the VAT accounting period in which the goods were delivered, regardless of when the invoice is issued
Why C? And why not the others?
Correct answer: C. 28 March, because issuing a VAT invoice within 14 days of the basic tax point creates a later actual tax point on the invoice date
Under HMRC's time of supply rules, the basic tax point set by delivery of the goods is overridden if the supplier issues a VAT invoice within 14 days of that basic tax point; doing so creates a later actual tax point on the date the invoice is issued, so the tax point here moves from 20 March to 28 March. The option treating the basic tax point as fixed and unchangeable ignores that this 14-day rule is a routine, commonly used feature of the time of supply rules, not an exceptional override. The option tying the tax point to the date of payment misapplies a different scenario; payment can create an actual tax point only where payment or a payment-triggered invoice precedes the basic tax point, not as a general rule that payment date always governs. The option pointing to the end of the VAT accounting period confuses when a supply must be reported with when its tax point arises; the tax point determines which accounting period a supply falls into, it is not itself set by the period's end date.
Source: GOV.UK (HMRC internal manual): VAT Time of Supply — VATTOS5240, extensions to the 14 day rule