Supplies between connected persons

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The time for supply rules between connected persons is intended to prevent any possible VAT leakage due to the fact that the persons are closely associated. The time of supply rules put a liability on the supplying entity to account for output tax when goods are delivered or services are rendered to the connected person. In practice the accounting for these supplies between connected persons are often delayed.

The proposed amendment would be welcomed by group companies as they would then be only liable to account for the VAT on for example management fees when the value for these charges are agreed, invoiced and paid for. This often only happens at or after the financial year-end. The relief would be limited to supplies where the recipient entity would be entitled to a full input tax credit