An exception is made if you issue a self-billed invoice within 14 days of the basic tax point described in paragraph 14.2.2 b) of the VAT Guide: VAT Guide. This creates a checkpoint. Each invoice must comply with the rules for a self-charged VAT invoice in paragraph 4.2. If you do, you should set the appropriate deadlines for your initial agreements when they are concluded. You must avoid self-billing from a supplier at all times if you do not have a written agreement. You must clearly mark with the reference “SELF-BILLING” each invoice billed by yourself. You cannot charge a supplier who has changed their VAT registration number until you have prepared a new self-billing agreement for them. This communication is aimed at customers who wish to settle their accounts with their suppliers themselves, as well as suppliers who wish to accept or accept invoices from their customers. The following table tells you what to keep in mind if you have self-billing agreements for shipments of goods with non-British companies. Remember that EU countries can set their own self-billing conditions. You must therefore ensure that any agreement you make for one supplier in another country also meets these conditions. There are several scenarios in which it may be useful to enter into a self-billing contract with a supplier: If you want to establish a self-billing agreement, you do not have to talk about it or ask for permission from HMRC.
You must: A self-billing agreement is an agreement between a supplier and its customer. One of the advantages is that you don`t have to worry about writing an invoice and sending it to your customer. The invoice contains the name of the company, the address of the company and each vat number. Self-billing invoices must be labeled as “self-billing” by law. Keep in mind that you do not add VAT to self-charged invoices that you issue to suppliers that are not subject to VAT. In this case, the self-bills you made are not correct invoices. You are not proof of your right to deduction and your supplier must issue its own invoices. It is the customer who establishes the tally before sending a copy with the payment to you or your supplier. You should encourage your customer or supplier to accept the creation of such an invoice.
Without an agreement, the self-bills you have issued are not proof of your right to VAT upstream. HMRC can check taxes and charge you a penalty if you taxed them upstream. HMRC does not insist that you accept self-billing. But your client can make self-billing a condition for doing business with you. If an agency self-bills on your behalf, it`s up to you to make sure the invoices are issued correctly. The whole establishment is an agreement that has a lot of legal weight and must be agreed by your company or agency. 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.