Where stage payments are made for services, or services together with goods, supplied in the course of constructing, altering, demolishing, repairing or maintaining a building or civil engineering work under a contract, which provides for payment to be made periodically or from time to time, those services are treated as separately or successively supplied at the earlier of the time when1:
- Ìý
(a)ÌýÌýÌýÌý a payment is received, and
- Ìý
(b)ÌýÌýÌýÌý an invoice is issued by the supplier
A tax point is not created under (b) above if the relevant invoice is a self-billed invoice2.
Anti-avoidance legislation—stage payments
The general rule set out above was open to abuse in that, where no payment was received and no invoice issued, no tax point was created. This loophole could be exploited by forming a subsidiary company to construct a building on behalf of a partly exempt parent. Provided no payment was made (funding being provided by alternative means) and no invoice was raised, no tax point (and therefore no irrecoverable
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