- Self-billing is a VAT arrangement where the customer, not the supplier, issues the VAT invoice; both parties must be VAT registered, and HMRC approval is not required, but supplier/customer agreement is essential.
- It can simplify invoicing where the customer determines value after supply (for example, royalties, construction, Feed-In-Tariff, and scrap metal), and can create more uniform purchase documentation.
- Key risks include incorrect VAT rates, missing documents, duplicate invoicing, broken self-billing conditions, and weak audit trails; self-billing is considered highly sensitive to VAT system integrity.
- Businesses must have a formal self-billing agreement with each supplier, review it regularly, and keep records; invoices must contain full VAT invoice details.
- If a supplier deregisters for VAT, self-billing may continue in a limited sense, but VAT invoices cannot be issued and input tax cannot be reclaimed.
Source: marcusward.co
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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