NV3 - Invoicing: Tax Points

The NV3 - Invoicing: Tax Points report is designed to identify vehicle deals where the 14-day rule for tax points may have been exceeded. It ensures that vehicles invoiced in the current VAT period are accounted for in the correct period, avoiding potential VAT compliance issues.

Associated Risks

1. Exceeding the 14-Day Rule:

   • Under Section 6(5) of the VAT Act 1994, a tax point is created by issuing a VAT invoice within 14 days of the basic tax point (delivery date).
   • If no invoice is issued within this period, the tax point reverts to the basic tax point, which could result in the VAT being reported in the wrong period.

2. Compliance Issues:

   • Incorrect VAT reporting may lead to penalties or errors in tax submissions.

• Reference: See VAT Notice 700 Section 14.2 for detailed guidance on tax points.

Key Considerations

1. Advance Payments:

   • Receiving payment in advance of the invoice date creates its own tax point.
   • Example: Businesses may have already accounted for VAT on advance payments as part of a manual adjustment at the period’s end.

2. Manual Adjustments:

   • Ensure manual adjustments for advance payments are accurately recorded to align with VAT regulations.

Scenarios Where This Report is Useful

• Identifying deals that may require VAT adjustments due to delayed invoicing.
• Ensuring compliance with VAT rules by correctly recognising tax points.
• Reviewing advance payments to confirm VAT is accounted for appropriately.

Key Notes

• VAT Compliance: Ensure VAT is reported in the correct period to avoid discrepancies or penalties.
• Advance Payment Handling: Properly document and account for advance payments to prevent errors.
• Tax Point Accuracy: Regularly review deals to ensure tax points align with HMRC rules.