Self-Billing Invoice: Rules, Agreement and Example

Quick answer: A self billing invoice is an invoice the customer prepares on behalf of the supplier, then sends to the supplier with payment. In the UK it is allowed for VAT when both parties sign a written self-billing agreement, the invoice shows the supplier's VAT details and the statement "The VAT shown is your output tax due to HMRC", and the customer keeps proper records.

Self-billing flips the usual invoicing flow. Instead of waiting for dozens of suppliers to send invoices in different formats, the customer, who already knows what was delivered, raises the invoice itself. It is common with hauliers, growers, scrap metal dealers, subcontractors, publishers paying royalties and platforms paying sellers. This guide explains the HMRC rules, what the agreement must say, what the invoice must show and how the EU approach compares. If you need a standard UK VAT invoice instead, see our VAT invoice guide.

What is a self billing invoice?

A self-billing invoice (also written self billing invoice or self-billed invoice) is a VAT invoice issued by the customer for goods or services it has received from a supplier. The customer calculates the amount, issues the invoice in the supplier's name, pays it and sends a copy to the supplier. The supplier records the invoice as its own sale and accounts for any VAT shown on it.

It is still the supplier's sale. Self-billing changes who prepares the paperwork, not who makes the supply or who owes the output VAT.

When does self-billing make sense?

• The customer controls the data. A distributor weighing produce, a haulage firm logging loads or a publisher calculating royalties knows the quantity and price before the supplier does.
• Many small suppliers. Paying 200 subcontractors from one system is easier than matching 200 differently formatted invoices.
• Suppliers who struggle with paperwork. Self-billing removes late or missing invoices as a reason payments are held up.
• Fewer disputes on price. The customer applies the agreed rate consistently.

The trade-off is responsibility: the customer must keep the agreements current and get every invoice right, because mistakes affect the supplier's VAT return.

Self-billing pros and cons

For the customer	For the supplier
Pro: consistent invoice format and data from its own system	Pro: no invoices to prepare, and payment arrives with the paperwork
Pro: fewer late, missing or duplicate supplier invoices	Pro: less admin for small or one-person businesses
Con: must manage agreements, reviews and VAT number changes	Con: must check every self-billed invoice, because the VAT on it is the supplier's output tax
Con: errors affect someone else's VAT return	Con: less control over the timing and description of the sale

Suppliers should not treat self-billed invoices as someone else's problem. If the customer gets the quantity, rate or VAT wrong, the supplier's own VAT return will be wrong too, so agree a short window, such as 14 days, to raise any queries.

HMRC self billing rules: who can use it

According to HMRC's guidance on VAT self-billing arrangements, a customer who wants to self-bill must:

• have a signed, written agreement with each supplier before self-billing them;
• review agreements at regular intervals (they usually last 12 months);
• keep records of every supplier it self-bills;
• make sure each invoice contains the required information;
• stop self-billing a supplier who changes VAT number until a new agreement is in place.

You do not need to tell HMRC or get its approval to start. HMRC's guidance describes the arrangement for VAT-registered customers and suppliers; you must not add VAT to self-billed invoices issued to suppliers who are not VAT registered. VAT Notice 700 also confirms that a customer operating self-billing is excused from the normal duty on the supplier to issue a VAT invoice for those supplies.

What a self-billing agreement must include

The self-billing agreement is a legally binding document and you must be able to show it to HMRC. HMRC lists these contents:

Clause	What it says
Authority to invoice	The supplier agrees that the customer may issue invoices on its behalf.
No duplicate invoices	The supplier will not issue its own VAT invoices for the supplies covered.
Duration	An expiry date, usually 12 months, or the end date of the business contract it sits in.
Notification duties	The supplier will tell the customer if it deregisters for VAT, gets a new VAT number or transfers its business as a going concern.
Third parties	Details of any outsourced provider that issues the invoices for the customer.

Many businesses also add commercial terms: how quickly the supplier must query an invoice, how corrections are made and which bank account receives payment. If the supplier transfers its business as a going concern, a new agreement is needed with the new owner.

What a self-billed invoice must show

A self-billed VAT invoice needs everything a full VAT invoice needs, plus the supplier's details and a fixed statement:

• A unique invoice number in a sequence for that supplier (many customers use a separate series per supplier, for example SB-ACME-0042).
• Invoice date and the time of supply (tax point) if different.
• The supplier's name, address and VAT registration number.
• The customer's name and address.
• A description of the goods or services, quantity and unit price.
• The VAT rate and the amount payable excluding VAT for each rate.
• The total VAT in sterling and the total amount payable.
• The words "The VAT shown is your output tax due to HMRC".

VAT Notice 700 also says self-billed invoices must carry a "self billing" reference, so many businesses print "Self-billing invoice" as the document title as well as the HMRC statement.

Self billing invoice example

A distribution company (the customer) self-bills a VAT-registered haulier for October deliveries.

Description	Qty	Rate	Net
Pallet deliveries, Leeds to Manchester, October 2026	12 loads	£250.00	£3,000.00
VAT at 20%			£600.00
Total payable to supplier			£3,600.00

The arithmetic: 12 × £250 = £3,000; £3,000 × 20% = £600; £3,000 + £600 = £3,600. The invoice is titled "Self-billing invoice", shows the haulier as the supplier with its VAT number, shows the distribution company as the customer, and carries the statement "The VAT shown is your output tax due to HMRC". The customer pays £3,600 and sends the invoice copy with a remittance advice. The haulier enters £600 as output tax; the customer reclaims £600 as input tax, subject to the normal rules.

Self-billing and the construction reverse charge

Contractors in the Construction Industry Scheme often self-bill subcontractors. Where the VAT domestic reverse charge for building and construction services applies, the self-billed invoice must not charge VAT for the subcontractor to pay over; instead it shows the reverse charge wording and the VAT the customer must account for. A CIS payment and deduction statement is a separate document and does not replace a VAT invoice. Our guide to the reverse charge invoice covers the wording.

VAT self-billing in the EU

The EU VAT Directive (2006/112/EC) allows self-billing under Article 224 when there is a prior agreement between the parties and a procedure for the supplier to accept each invoice. Article 226 requires the invoice to carry the mention "Self-billing" (in each member state's language, such as "Autofacturation" in France or "Gutschrift" in Germany). Member states can add their own conditions, and countries moving to mandatory e-invoicing, such as Germany, Poland and France, have specific rules for self-billed e-invoices, so check the local requirements before you self-bill an EU supplier.

Records to keep

• A copy of every signed self-billing agreement and its review dates.
• Each supplier's name, address and VAT registration number.
• Copies of every self-billed invoice and credit note.

HMRC warns that without the required records the invoices are not valid VAT invoices and the customer cannot reclaim the input tax. You stay responsible even if you outsource the process. For retention periods, see how long to keep invoices.

Common self-billing mistakes

• Self-billing before the written agreement is signed.
• Letting agreements lapse past their expiry date without review.
• Missing the statement "The VAT shown is your output tax due to HMRC".
• Adding VAT for a supplier who is not, or is no longer, VAT registered.
• Continuing to self-bill after the supplier changes its VAT number.
• Supplier and customer both issuing invoices for the same supply.

Self-billing checklist

1. Signed agreement on file for each supplier, with expiry date.
2. Supplier's VAT number confirmed and recorded.
3. Separate invoice number sequence per supplier.
4. Full VAT invoice details plus the HMRC statement.
5. Copy sent to the supplier with payment.
6. Agreement reviewed before it expires.

Important: This is general information, not tax or legal advice. Rules can change, so confirm the current requirements in HMRC's VAT Notice 700 and the self-billing guidance, or speak to an accountant.

Next step: draft a self-billed invoice

In the UK invoice generator, enter the supplier's details in the "from" section and your business as the customer, title the document "Self-billing invoice", add the supplier's VAT number, and put "The VAT shown is your output tax due to HMRC" in the notes. Use the invoice number generator to set up a per-supplier sequence. The PDF is a document you send yourself; the tool does not send invoices or keep agreements for you.