The time of supply rules for transactions between connected persons where the consideration for the supply is not determined, will be amended.
The time of supply for VAT is usually triggered at the earlier of payment of consideration or the issuing of an invoice. With connected persons, special time of supply rules apply. Section 9(2) effectively provides that the time of supply for a connected person transaction is the time that goods are delivered or made available or the time that services are rendered. This creates a difficulty if the consideration for the supply will only be determined at a later date. Section 10(4), which deals with the value of supplies between connected persons, does not address this scenario, thus making it impossible for the supplier to account for VAT at a time when the consideration has not yet been determined. The amendment will presumably address this type of scenario. We assume that the time of supply will either be moved to the time that payment takes place or an invoice is issued, or that the value will be deemed to be the open market value of the supply at the time of supply.