It is not necessary to obtain prior authorization from the VATman. Each company can self-reward, provided the arrangements meet the legal requirements. A self-billing contract usually lasts twelve months. Then you need to check the agreement to prove to HMRC that your supplier has agreed to accept the invoices collected on your behalf. When it comes to VAT self-billing, you must submit a VAT invoice to the customer, whether you are providing services or goods at a reduced or standard rate to another person subject to VAT. Self-reporting power sometimes makes the mistake of treating their self-charged invoices as purchase invoices. If you processed VAT upstream on a self-charged invoice, that`s a mistake. Section 2 of VAT Communication 700/45: How to correct VAT errors and corrections or claims, explain how to correct the error. It is important to check the agreements, as this allows you to confirm that your supplier is: if one of your customers wishes to establish a self-billing agreement with you, you will be asked to accept it in writing. If you agree, you will receive a self-billing agreement that you can sign. Here is an example of an acceptable self-billing agreement (PDF, 172 KB, 1 page) You can reproduce it if you wish, but you don`t need to formulate your agreement precisely in this way as long as the agreement you are using contains all the necessary information, as explained in Section 3. Section 3.1 provides guidelines to clarify requirements for self-billing agreements. Normally, the VAT delivery date is the actual date on which goods or services are made available to you, to you, to the customer.
However, if you issue a self-billed invoice within 14 days of that delivery date, the date you charge will be fixed on the date of booking for VAT purposes. If an HMRC official wants to see the agreement, you have to show it to them. Each invoice must comply with the rules for a self-charged VAT invoice in paragraph 4.2. HMRC does not insist that you accept self-billing. But your client can make self-billing a condition for doing business with you. If, on the same day, you enter into individual agreements with your suppliers and the contracts all expire on the same day (for example. B you have agreed with all suppliers to operate VAT self-billing for a period of 12 months from today`s date), you may have difficulty checking all agreements on the same day. In such a situation, you can check them on a rolling basis that spans 6 to 12 months.
However, if you have a commercial contract with your supplier, you may not need to enter into separate self-billing agreements. If the self-billing contract is included in the terms of the contract, the contract lasts until the end of the contract. Under these conditions, you should only check the self-billing contract after the contract has expired. Self-billing agreements can be established with suppliers as long as the following conditions are met: you can only recover the upstream VAT shown on the invoices charged by yourself if you meet all the registration requirements. A customer who wishes to self-bill at the end of the term of the contract must verify the contract and obtain proof that the supplier has agreed to continue self-billing for another specified period. In any event, it is advisable to carry out an audit every 12 months to confirm that the supplier is still subject to VAT and that it is ready to continue the self-billing agreement. Typically, the VAT bill is issued by the supplier, but in certain circumstances the customer prepares the invoice and gives a copy to the supplier. This system is called self-billing. Any company can use this process as long as certain conditions are met. Customers should, however, ensure that they enter into and verify self-billing agreements with suppliers, keep copies of these agreements with the names, addresses and registration details of their suppliers, and supplier data for consultation.