self billing invoice

Chapter 26

What Is a Self-Billing Invoice?

Author: Bhaval Patel

Step By Step Guide on Self-Billing Invoice

Self-billing invoice is an arrangement between the supplier and the buyer, wherein the customer prepares the invoice for the supplier and sends them a copy along with the payment. For this arrangement to be made, both parties have to be VAT registered.

One benefit of the Self-billing invoice is that the company or buyer of the goods won’t wait on the seller to send them an invoice before making payment. The seller of the goods also doesn’t need to create an invoice to get paid in this case. Invoice is generated once the timesheet has been approved.

Self-Billing guide


Usually, the supplier is responsible for issuing VAT invoices. In some cases, the buyer may decide to prepare the invoice and send it to the supplier. This arrangement between both parties is known as self-billing.

This invoice type can be used by any business, but there are some conditions to be met for this process to take place. They include:

  • The buyer and seller would have agreed that the buyer creates the invoice
  • The buyer and seller must be VAT registered
  • The initial agreement will be reviewed from time to time
  • The buyer has to keep records of the seller’s goods to allow self-billing
  • The said invoice has to contain lol necessary information that should be included in a VAT invoice
  • If the seller of goods loses their VAT registration, the buyer will continue issuing the invoice. Still, they cannot include any input tax since VAT regulations no longer guide the arrangement.

Also, it is essential to take note of these things:

  • Self-billing does not affect contracts and commercial agreements
  • The seller and buyer must have their copies of self-billing invoices for tax purpose

When the arrangement has been made for self-billing invoices to be issued, the invoices are generated by the customer throughout the contract.

Aside from the details of a VAT invoice, the details to be included in a self-billing invoice are:

  • Name, address, phone number, and email of the buyer and seller
  • VAT registration number of the buyer and seller
  • This statement has to be included “The VAT shown is your output tax due to HMRC.”
  • It has to be labeled “self-billing.”

It is left to the buyer and seller in the agreement to ensure that the invoice must contain all necessary details of the goods bought with the appropriate VAT rate.

Sometimes, buyers may issue a self-billing invoice with the help of a third party on their behalf. Regardless, the buyer is still responsible for making sure the invoice is prepared and sent.

The buyer should also make sure that every billing agreement is kept with the seller. Records of the transaction should also be kept with the correct details of the business for referencing purpose and inspection by the HMRC.

The seller shouldn’t see a self-billing invoice as a purchase invoice but can reclaim the VAT included as input tax.

Why Use Self Billing?

Why Use Self Billing

Here are some of the benefits of self-billing:

  • Self-billing saved time and reduces administrative tasks for the buyer and seller. It also reduces costs and saves time spent on managing invoices.
  • Self-billing invoices are created by the customers, so they choose the format good for their financial administration
  • When the timesheet is approved, the invoice is prepared and paid, and it means easy and fast payment for the seller.
  • Self-billing invoices are prepared when a timesheet is approved, and as such, it contains the exact terms, days, or hours worked with their dates. There’s no room for error in a self-billing invoice.

If you prefer a self-billing invoice as a customer and your vendor is willing to get into agreement with you, contact a tax specialist before reaching an agreement with them.

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