Taxation (UK) · The computation of VAT liabilities

VAT Tax Point and Invoicing Rules Explained

Updated 11 October 2026 · Fact-checked

The tax point is the date a supply is treated as made for VAT. It decides which VAT return the supply falls into. Start with the basic tax point, then check whether an earlier invoice or payment creates an actual tax point. The earlier of those events normally fixes the date.

Understand Tax Point and Invoicing Rules

VAT is reported on returns for set periods. So you must know which period each supply belongs to. The date a supply is treated as made is the tax point, also called the time of supply.

The basic tax point depends on what is supplied. For goods, it is the date the goods are removed (or made available to the customer). For services, it is the date the services are completed.

The basic tax point can be replaced by an actual tax point. This happens if the supplier issues a VAT invoice or receives payment before the basic tax point. The actual tax point is then the date of the invoice or the date of the payment, whichever is earlier. It applies only to the amount invoiced or paid.

There is also a rule for invoices issued after the basic tax point. If the supplier issues a VAT invoice within 14 days after the basic tax point, and has not been paid earlier, the invoice date becomes the actual tax point. The 14-day period can be changed by agreement with HMRC. This is a common exam point.

A deposit paid before delivery usually creates an actual tax point for the amount of the deposit. A true refundable security deposit, held only as security and not as payment, does not. A supplier must issue a VAT invoice to a VAT-registered customer for standard-rated supplies. A valid invoice must carry set details, so you need to know them.

Key rules to remember

Basic tax point (goods): Date goods are removed or made available to the customer; Applies if no earlier invoice or payment and no later 14-day invoice.
Basic tax point (services): Date services are completed; Completion, not the date work starts or the date of the contract.
Actual tax point (early): Earlier of invoice date and payment date, if before the basic tax point; Applies only to the amount invoiced or paid.
Actual tax point (14-day rule): Invoice date, if invoice issued within 14 days after the basic tax point; Applies only if the invoice is the first event and no earlier invoice or payment has fixed the tax point.
Deposits: Deposit received before basic tax point = actual tax point for that amount; A refundable deposit held purely as security is not a payment for the supply.
Valid VAT invoice contents: Supplier name and address; supplier VAT number; invoice date; tax point if different; unique sequential number; customer name and address; description of goods or services; quantity, unit price and rate of VAT for each item; total excluding VAT; total VAT payable; Also show any cash discount offered and the rate of VAT applicable. Learn it as a list.
Standard VAT rate: 20%; Given in the ACCA tax rates and allowances.

How to solve Tax Point and Invoicing Rules questions

Use the same sequence for every tax point question. Write down each date in the scenario first, then decide which one fixes the tax point for each amount.

1List every date given: delivery or completion, invoice date, payment date, deposit date.
2Decide whether goods or services are supplied, and find the basic tax point.
3Check whether an invoice or payment occurred before the basic tax point. If so, the earlier one is the actual tax point for that amount.
4If nothing happened earlier, check whether an invoice is issued within 14 days after the basic tax point. If so, the invoice date is the tax point.
5Treat deposits and part payments separately. Each amount can have its own tax point, and the balance follows the rules again.
6Match each tax point to the VAT return period that contains it.
7Calculate VAT on the amount, using 20% of the net or 1/6 of a VAT-inclusive amount, and state the answer clearly.

Quickest way: Earliest event check

When to use it: Use this for objective test questions with several dates and a single amount.

Circle the basic tax point date.
Ask: did a payment or invoice come before it? If yes, take the earlier one.
If not, ask: was the invoice within 14 days after it? If yes, take the invoice date.
Otherwise the basic tax point stands.
Check the date against the return period dates.

Common mistakes in Tax Point and Invoicing Rules

Using the payment date as the tax point when payment is after delivery.
Students think VAT follows cash, as in the cash accounting scheme.
Fix: Outside the cash accounting scheme, late payment does not move the tax point. Use the basic tax point or the invoice date.
Ignoring the 14-day rule.
Students stop once they find the basic tax point.
Fix: Always check whether an invoice is dated within 14 days after the basic tax point and nothing earlier has occurred.
Treating a whole contract as one tax point when a deposit was paid.
Students look at the final delivery only.
Fix: Split the supply. The deposit has its own tax point and the balance is dealt with separately.
Treating a refundable security deposit as payment.
Any money received looks like consideration.
Fix: Check whether the money is held as security and returned. If so, it does not create a tax point.
Missing items on the invoice list, such as the unique number or the supplier's VAT number.
Students recall only name, date and total.
Fix: Learn the full list and tick each item off when asked what a valid invoice must show.
Saying the 14-day period is always 14 calendar days from the invoice.
Students misread direction of time.
Fix: It runs from the basic tax point to the invoice date, not from the invoice.

Worked examples

Example 1

Alpha Ltd, a VAT-registered business with quarterly returns to 31 March, 30 June and so on, delivers goods to a customer on 28 March. It issues an invoice for £12,000 plus VAT on 5 April. The customer pays on 20 May. In which VAT return does the supply fall and what is the output VAT?

Show the solution

Goods are supplied, so the basic tax point is delivery on 28 March.
No invoice or payment came before 28 March, so there is no early actual tax point.
The invoice is dated 5 April, which is 8 days after 28 March. This is within 14 days.
The invoice date of 5 April therefore becomes the actual tax point.
5 April falls in the quarter to 30 June.
Output VAT = £12,000 × 20% = £2,400.

Answer: The supply is in the quarter to 30 June, with output VAT of £2,400.

Example 2

Beta Ltd agrees to build a bespoke cabinet for £9,000 plus VAT at 20%. On 10 June the customer pays a £3,000 deposit (VAT-exclusive, no VAT yet added). Beta invoices the balance on 25 July when the work is completed on 20 July. The customer pays on 30 August. Give the tax point for each part and the VAT on each.

Show the solution

The work is a service, so the basic tax point is completion on 20 July.
The deposit was paid on 10 June, before 20 July, so it creates an actual tax point of 10 June for the amount received.
Treat the £3,000 as VAT-inclusive only if the facts say so. Here it is stated as a VAT-exclusive amount received, so VAT = £3,000 × 20% = £600.
The balance is £9,000 − £3,000 = £6,000 net.
The invoice date of 25 July is 5 days after the basic tax point of 20 July, within 14 days. The tax point for the balance is 25 July.
VAT on the balance = £6,000 × 20% = £1,200.
Payment on 30 August does not change either tax point.

Answer: Deposit: tax point 10 June, VAT £600. Balance: tax point 25 July, VAT £1,200. Total VAT £1,800.

Exam tips

Write the dates in a short timeline before deciding. This prevents slips in objective test questions.
Remember that an early invoice or payment only fixes the tax point for the amount covered.
Know the invoice contents list. Questions often ask which item is missing or what must be shown.
In Section C, state the tax point and the return period in the same line, and show the VAT working.
Check whether the question states that an amount is VAT-inclusive. If so, use VAT = amount × 1/6 at the 20% rate.

Practice questions from The computation of VAT liabilities

Tax Point and Invoicing Rules: frequently asked questions

What is the basic tax point for goods and services?

For goods it is the date the goods are removed or made available to the customer. For services it is the date the services are completed. An earlier invoice or payment, or an invoice within 14 days after, can replace it.

How does a deposit affect the VAT tax point?

A deposit received before the basic tax point normally creates an actual tax point for the amount of the deposit. The balance is treated separately. A refundable deposit held only as security is not payment for the supply, so it does not create one.

What is the 14-day rule?

If the supplier issues a VAT invoice within 14 days after the basic tax point, and no earlier invoice or payment has fixed the tax point, the invoice date is the actual tax point. The period can be extended by agreement with HMRC.

Does late payment by the customer change the tax point?

No, not outside the cash accounting scheme. The tax point stays with delivery, completion or invoice. Late payment may lead to bad debt relief later, but it does not move the supply into a later return.