Invoices with VAT are usually issued by the supplier. However, in certain circumstances, the Customer may issue the invoice and send the copy to the Supplier. This agreement between the Customer and the Supplier is called self-billing. How to set up a self-billing contract between a VAT taxable customer and his supplier and what conditions must be met. You can set up self-billing agreements with your suppliers, as long as you can meet certain conditions, you must do so: if one of your customers wants to set up a self-billing agreement with you, he will ask you to accept it in writing. If you agree, you will receive a self-billing agreement to sign. Suppliers may be based in the United Kingdom, the European Union or countries outside the EU. Invoices cannot be issued to a supplier who has changed their VAT identification number unless a new agreement has been prepared. One of the many advantages of self-billing is that customers have the freedom to manage their invoices for self-billing. In scenarios where the supplier does not have the initiative to invoice the customer, the customer now has the opportunity to make them aware of the invoice and speed up the transaction process. You can only enter into a self-billing agreement if your provider agrees to create one. If you don`t have an agreement with your supplier, your self-invoiced invoices are not valid VAT invoices – and you won`t be able to recover the input tax on them.
Both parties to the agreement must ensure that the self-billing invoice accurately reflects the relevant transactions and that the correct VAT rate is applied. Although the dictated self-billing conditions are agreed between the customer and the supplier, both should be aware of compliance with certain VAT conditions. To do this, suppliers must take the following steps: Once the self-billing agreement is in effect, self-billing invoices will be issued by customers for all transactions with suppliers during the term of the contract. If you are a self-employed person, you will need to keep certain records. These are: Some customers use third-party providers to invoice on their own behalf. In this case, the customer remains responsible for ensuring that the invoices are issued. If an agency handles self-billing on your behalf, it`s up to you to make sure the invoices have been issued correctly. The entire installation is an agreement that has a lot of legal weight and must be agreed by your company or an agency. Note that EU countries can set their own self-billing conditions.
You must therefore ensure that any agreement you create for a supplier in another country also meets these conditions. In addition to the details of a full VAT invoice, an invoice with its own invoice to a supplier also contains: Although there are many advantages for self-billing, there are a few disadvantages to consider. In some cases, self-billing can expose your business to large-scale errors. The documents could be lost or the invoice could be accompanied by the wrong VAT rate. Self-billing is an agreement between a supplier and a customer. The customer and the supplier must be subject to VAT. The customer creates the supplier`s invoice and sends a copy to the supplier with the payment. Self-billing agreements can be entered into with suppliers provided that the following conditions are met: Since the self-billing rules are not clearly defined, you should consult a qualified tax professional if you plan to enter into an agreement with the suppliers. Be careful not to treat invoices that you have invoiced yourself as purchase invoices and to recover the VAT indicated as your input tax.
If you mistakenly treat VAT as an input tax, you must correct the error. Self-billing promotes consistency of operations, which facilitates administration. Since the customer delivers the invoice, he will already include all the necessary details in the invoice to reference and facilitate the supplier. Company registered in England and Wales,Company number: 7051399 VAT number: 319160025 PartnerContract agreement PA10082020 Page 11 of 12Annex 1: Self-billing agreement This is a self-billing agreement between iamsold Ltd. Self-counting, of course, gives the customer more responsibility – only they can create and produce self-counting. .