Value Added Tax Act 1994 section 88

Supplies spanning change of rate etc.

Section 88 deals with how VAT is applied to supplies that straddle a change in the VAT rate or a change in the VAT liability of particular types of supply, and provides an election that allows the supplier to use the rate applicable at the time the supply actually takes place rather than the rate triggered by early invoicing or payment.

• When a VAT rate changes or the classification of supplies changes (e.g. between standard-rated, zero-rated, reduced-rate or exempt), supplies that span the date of change may be affected by the normal tax point rules bringing the supply into a different rate period.
• The supplier can elect to disregard the artificial tax point created by early invoicing or payment, so that VAT is charged at the rate that would apply based on when the supply itself actually takes place.
• If such an election is made after a VAT invoice has already been issued, regulations may require the original invoice to be replaced or corrected to reflect the elected treatment.
• The election is not available for certain deemed supplies, specifically those covered by Schedule 4 paragraph 7 (goods held on deregistration) or Schedule 11 paragraph 2B(4) (certain self-billing arrangements).