Self-billing works in five steps: put a written agreement in place with the supplier, raise the invoice yourself from the data you hold, apply the correct VAT, send the supplier a copy, and pay them. The supplier keeps the copy for their own records and doesn’t issue a separate invoice.
Key points
- Agree → raise → apply VAT → send copy → pay.
- You raise the invoice from data you already hold.
- Both parties keep the self-billed invoice for their records.
Step 1 — Put a self-billing agreement in place
Before you can self-bill a supplier, you both sign a written self-billing agreement. It confirms the supplier accepts invoices you raise, won’t issue their own for those supplies, and will tell you if their VAT status changes. It also has a review or expiry date.
Step 2 — Raise the invoice from your data
Using the figures you already hold — hours, quantities, commission or royalties — you prepare the invoice, with a unique sequential number and both parties’ details.
Step 3 — Apply the correct VAT
Add VAT at the correct rate where the supplier is VAT-registered, or none where they aren’t. In construction, the CIS domestic reverse charge may apply, so no VAT is charged and you account for it yourself.
Step 4 — Send a copy and Step 5 — Pay
Send the supplier their copy of the self-billed invoice and pay them the amount due. Both sides keep the invoice for their VAT records.
This is general information, not tax advice — confirm your own position with your accountant or HMRC (see VAT Notice 700/62 on self-billing).