What is self-billing? Self-billed invoices explained for UK suppliers

It starts with a request. HMRC's guide puts it from the supplier's side: if a customer wants to self-bill you, "they’ll ask you to agree to this in writing. If you agree, they’ll give you a self-billing agreement to sign." Sign it, and that customer writes the invoice for your supplies, working from its own records. You stop raising sales invoices to them. HMRC will not insist on it, but the customer can make it a condition of trading.

What is self-billing?

A VAT invoice written by the customer instead of the supplier. VAT Notice 700/62 defines it: "Self-billing is a commercial arrangement between a supplier and a customer in which the customer prepares the supplier’s invoice and forwards a copy to the supplier with the payment." HMRC's guide, VAT: self-billing arrangements, adds: "Both customer and supplier must be VAT registered." This page follows HMRC's rules as published, checked in October 2026.

HMRC calls the customer the self-biller and the supplier the self-billee. The document is still the supplier's VAT invoice. Only the author changes.

In supply-chain terms the flow runs order, delivery, receipt, self-bill. OpenPeppol's self-billing specification describes the same thing: "The self-billed invoice refers to the suppliers goods or services which have been consumed by the customer based on his own records."

Self-billing at a glance

Why do customers self-bill their suppliers?

Because it can make the customer's own invoicing simpler. HMRC lists two advantages for the self-biller: "your accounting staff will be working with uniform purchase documentation", and "it may make invoicing easier if you (rather than your supplier) determine the value of your purchase after the goods have been delivered or the services supplied".

HMRC is as plain about the cost. It warns the customer that "you may find it difficult to set up self-billing arrangements with your suppliers, or burdensome to maintain them". A customer raising electronic self-bills to large numbers of suppliers needs an accounting system "accurate enough to handle the demands you’ll be placing on it".

At volume, self-billing is a data job on both sides of the trade.

Do you have to agree to self-billing?

No, but your customer can insist on it as a commercial term. "HMRC will not insist that you agree to self-billing. But your customer may make self-billing a condition of doing business with you."

Once you sign, the rules bind you for the life of the agreement. If you later cannot meet the conditions, or fail to, HMRC says "You will have to tell your customers and arrange to issue your own invoices for the supplies you make to them".

What must a self-billing agreement contain?

A short list of commitments, signed by both of you before the first self-bill. "The agreement must be in place before self-billing commences." HMRC's guide adds: "You’ll both need to sign a formal self-billing agreement."

Notice 700/62, paragraph 3.1, sets out what a valid agreement must do:

The review is your customer's job, and the rule depends on where the agreement sits. A standalone agreement runs for the period it states. To carry on after that, your customer reviews it and you both agree a new period. HMRC's general advice to the customer: "It is advisable to carry out a review every 12 months." An agreement written into the trading contract lasts until the contract ends, and the customer "would not need to review the self-billing agreement until the contract had expired". HMRC publishes an example self-billing agreement in Notice 700/62.

The agreement also protects the customer: "Without an agreement, the self-billed invoices you have issued are not evidence of your entitlement to input tax."

What must a self-billed invoice show?

Everything a full VAT invoice shows, written by the customer. Notice 700/62 tells the self-biller to "complete self-billed documents showing the supplier’s name, address and VAT registration number, together with all the other details that make up a full VAT invoice".

Those details come from VAT Notice 700. They include "a sequential number based on one or more series which uniquely identifies the document", the time of supply, a description of the goods or services and the total VAT in sterling. The full list is in paragraph 16.3.1 of VAT Notice 700. On the tax point: "Your customer is required to show the tax point on the self-billed invoice." For how an EDI invoice carries those details, see EDI invoice explained.

Two lines then mark the document as a self-bill.

• The reference, which is law. Notice 700/62 says "The following sentence has the force of law." and then: "You must clearly mark each self-billed invoice you raise with the reference: ‘SELF-BILLING’."
• The output-tax statement. Notice 700/62 continues: "HMRC advises that you should also include the following statement on each self-billed invoice you raise:" ‘The VAT shown is your output tax due to HMRC’. HMRC's guide is firmer: "All self-billed invoices must include the statement ‘The VAT shown is your output tax due to HMRC’." Expect both lines on every self-bill you receive. HMRC's reason: "This will help to prevent your suppliers claiming the VAT back on these invoices by mistake."

One of the customer's own rules affects you directly. It must not self-bill a supplier "who has changed their VAT registration number until you have drawn up a new self-billing agreement with them". When a customer breaks the rules, its self-bills fail: "They will not be evidence of your right to deduct input tax and your supplier will have to issue their own invoices."

What changes for you as the supplier?

You stop writing invoices and start checking them. Notice 700/62 sets three main rules for a self-billee. You must:

• "not raise sales invoices for any transactions with your self-billing customer for the period of your self-billing agreement with them"
• "agree to accept the invoices your customer raises on your behalf for the duration of the agreement"
• "agree to notify your customer at once if your VAT registration status changes"

HMRC's guide spells out that last duty: "tell your customer at once if you change your VAT registration number, cancel your VAT registration, or transfer your business as a going concern". After a going-concern transfer, the customer needs a new agreement with the new owner to carry on self-billing.

Then come the checks on every self-bill that arrives:

1. Check it against what you delivered. HMRC's words: "The self-billed invoice is for supplies you have made to your customer, and the VAT shown on it is your output tax. You should check the invoice is accurate and the correct rate of VAT has been applied."
2. Post it as a sale. "Self-billees sometimes make the mistake of treating their self-billed invoices as purchase invoices." The guide repeats the warning: "Take care not to treat self-billed invoices as purchase invoices and reclaim the VAT shown as your input tax."
3. Account for the VAT on time. The tax point sets the date, and the next section covers it.

OpenPeppol's specification describes the supplier's options: approve the self-bill, reject it, or dispute parts of it. On a rejection, "The supplier completely rejects the self-billed invoice, contacts the buyer and requests a self-billed credit note." Under a UK agreement you have already agreed to accept the self-bills your customer raises, so in the UK a rejection or dispute means asking the customer to correct the self-bill.

Without your own record of each delivery, there is nothing to check a self-bill against.

When is the VAT due on a self-billed supply?

Normally when you deliver, not when the self-bill arrives. If the customer issues the self-bill within 14 days of delivery, its issue date counts instead. HMRC's guide says the date of supply "is normally the date when you actually provide the goods or services to your customer, so you might have to account for the VAT before you’ve received the self-billed invoice or been paid."

Notice 700/62 explains that "issuing a self-billed invoice does not normally create a tax point in the same way as happens when a supplier issues its own VAT invoice." It names one exception: a self-bill issued "within 14 days of the basic tax point". Of that case, HMRC says: "This creates a tax point." HMRC's guide, writing to the customer, names the date: for a self-bill issued within 14 days, "the date you issue the invoice becomes the date of the transaction for VAT purposes."

For a supplier, that has two practical effects:

• The customer must show the tax point on each self-bill, so compare it with your own delivery dates.
• If the self-bill is issued within 14 days of delivery, use the tax point it shows. Otherwise your delivery date decides when the VAT is due, and the self-bill may come later. Keep that record complete.

How do you correct a self-billed invoice?

With a separate correcting document from the customer, not by trimming a later self-bill. Notice 700/62 tells the self-biller: "You should not reduce the value of a supply for which you have already raised a self-billed invoice by reducing the total you show on a subsequent invoice. Instead, you should issue a debit note for the amount by which the value of the supply has been changed."

Electronic correcting documents follow the same discipline. VAT Notice 700/63 says credit notes, and debit notes that fulfil the same function, must carry the same details as the original invoice and enough information to identify it.

In structured messages the correction usually has its own code. OpenPeppol's examples read "Code 261 indicating a credit note", and EANCOM lists "261 = Self billed credit note". Peppol also allows crediting by a negative self-billed invoice. If a self-bill is wrong, raise it with the customer and ask for the correcting document.

How do self-billed invoices travel by EDI and Peppol?

As ordinary invoice messages with their own document code. In the EANCOM INVOIC message, the code list includes "389 = Self-billed invoice". The structure is the invoice you already know, with a different code and the customer as sender.

Peppol has a specification of its own, Peppol BIS Self Billing. OpenPeppol states its aim: "The purpose of this document is to describe the use of the self-billed invoice and self-billed credit note messages in Peppol". It defines 389 as "An invoice the invoicee is producing instead of the seller." The roles flip: "The supplier and self-billed invoice receiver is the same entity, as is the customer and the self-billed invoice sender."

The specification also ties the self-bill back to the physical trade. It supports "self-billed invoice verification against the contract, the purchase order and the goods and service delivered", and expects each self-bill to carry enough information to look up records such as "the confirmed receipt of the goods or services".

HMRC's condition for electronic self-billing: "You will need to make sure that any electronic self-billing system can recognise self-billed invoices so that the input tax and output tax are accounted for correctly." Its definition of EDI shows why structure matters: "EDI (electronic data interchange) is a computer-to-computer exchange of structured data which permits automatic processing by the recipient."

This is where the PDF trap bites. A PDF self-bill usually has to be read and keyed by hand before anyone can compare it with a despatch record. A structured one arrives ready for automatic processing. For the sending side of Peppol, see how to send a Peppol invoice.

Self-billing later, on the same connection as your eInvoices

Transalis is a managed outcomes provider for B2B integration, EDI and eInvoicing. Transalis is an authorised Peppol Access Point. The eInvoicing page sets out where self-billing fits: "The same rail later carries your orders, forecasts and self-billing. eInvoicing is just the first payload." If you already trade by EDI, the eInvoicing add-on guide for EDI customers covers that step.

On the Peppol side, "Transalis eInvoiceTrack™ monitors delivery and compliance in real time; the managed team resolves issues before they affect trading." For the EDI orders and invoices you already exchange, Transalis DataTrack™ lets you "Confirm that invoices and orders actually landed and matched." The network has 15,000+ connected organisations and carries £7bn+ in invoice value per year.

Start trading in days, or see the managed service on the EDI page.