Self-billing is an arrangement where the customer (the buyer) prepares the invoice on the supplier’s behalf and sends them a copy, instead of the supplier issuing it. It’s used where the customer holds the figures the invoice is based on, and it’s allowed under UK VAT rules provided both sides have a written self-billing agreement in place.
Key points
- The customer prepares the invoice on the supplier’s behalf; the supplier doesn’t raise their own.
- A written self-billing agreement with each supplier is required.
- The customer still pays the supplier — only who does the paperwork changes.
- For VAT to be shown, the supplier must be VAT-registered.
How self-billing differs from normal invoicing
In normal invoicing the supplier raises the invoice and sends it to the customer. In self-billing the roles are reversed: the customer raises the invoice for what they’re buying, applies the correct VAT, sends the supplier a copy and pays them. The supplier does not issue their own invoice for those supplies.
The money still flows the same way — the customer pays the supplier. Self-billing only changes who prepares the paperwork.
When is self-billing used?
Self-billing suits situations where the customer already holds the data the invoice depends on — approved timesheets, weighbridge tickets, commission, royalties or valuations. Common UK sectors include construction (CIS), recruitment, scrap metal, publishing and royalties, marketplaces, affiliate marketing and logistics.
It’s especially valuable at volume: one consistent invoice run replaces hundreds of inconsistent supplier invoices.
Is self-billing allowed by HMRC?
Yes. Self-billing is permitted under UK VAT rules (HMRC VAT Notice 700/62) as long as there is a written self-billing agreement between the customer and each supplier, the agreement is reviewed at regular intervals, and self-billed invoices meet the normal VAT invoice requirements. For VAT to be shown, the supplier must be VAT-registered.
This is general information, not tax advice — confirm your own position with your accountant or HMRC (see VAT Notice 700/62 on self-billing).