Self-billing agreements for a self-employed workforce: what HMRC requires, and how to renew them without a gap

Short answer: A self-billing agreement is a written agreement, made before you self-bill, in which a VAT-registered supplier lets you raise their invoices, promises not to issue their own, and accepts yours. It needs start and expiry dates and ends automatically if either business is transferred as a going concern or the supplier deregisters. HMRC advises a review every 12 months.

Operational guidance, not tax or legal advice. Couriers are one example; the same agreements apply to field-service, cleaning and facilities teams paid on self-billed invoices. Checked against VAT Notice 700/62, the VAT Regulations 1995 and GOV.UK on 21 October 2026.

• What is a self-billing agreement?
• What must the agreement contain?
• Which suppliers can you self-bill with a VAT invoice?
• How long does a self-billing agreement last?
• How do you renew 200 agreements without a gap?
• What ends an agreement early?
• What should you keep on file?
• Where do operators usually slip up?
• How Zerity helps
• Common questions
  • Do I need HMRC approval for a self-billing agreement?
  • What must a self-billing agreement include?
  • How long does a self-billing agreement last?
  • Can I self-bill a supplier who is not VAT registered?
  • What happens to the agreement if a supplier sells their business?
• Sources

What is a self-billing agreement?

VAT Notice 700/62 describes self-billing as "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". You may only issue self-billed invoices if your suppliers have agreed, you have set up a self-billing agreement, and you follow the rules in paragraph 4.1.

HMRC does not approve self-billing arrangements. The notice says "You do not need to seek HMRC authorisation to operate self-billing", and GOV.UK's self-billing arrangements page says you "do not have to tell HMRC or get approval from them". HMRC's manual VATREC15010 dates this to 1 January 2004.

The legal base is regulation 13 of the VAT Regulations 1995, paragraphs (3) to (3F); (3) was substituted and (3A) to (3F) inserted by regulation 4 of SI 2003/3220; VATREC15020 says 13(3D) lets HMRC add conditions in the notice.

This page covers the agreement. For the weekly cycle of days worked, rates, invoices and debit notes, see our guide to running a weekly self-billed pay run.

What must the agreement contain?

Section 3.1 of the notice says the agreement "must be in place before self-billing commences" and must:

1. "include the supplier's agreement to the self-biller raising invoices for their (the self-billee's) supplies";
2. "specify that the supplier agrees not to raise VAT invoices for supplies covered by the agreement";
3. "specify that the supplier will accept each self-billed invoice created by the customer";
4. "contain a start date and expiry date, though the expiry date can be related to the term of any contract between the supplier and customer";
5. "bind both you and your supplier — this means it should be in writing, either on paper or in electronic form";
6. "be produced if you are asked to produce it by one of our visiting officers";
7. include the supplier's agreement to tell you if they "cease to be registered, transfer business as a going concern or become registered under another VAT number";
8. "make it clear if you intend to outsource responsibility for issuing the self-bills to a third party, such as an accounting bureau".

HMRC publishes an example agreement (PDF) at section 8. Section 3.2 says you can use it, write your own, or make the agreement part of your contract, as long as it includes all the required information.

Which suppliers can you self-bill with a VAT invoice?

VAT-registered self-employed suppliers. GOV.UK says "Both customer and supplier must be VAT registered" for a self-billing arrangement under the VAT rules. Before the first invoice, check the supplier's VAT number and address with HMRC's Check a UK VAT number service, which section 4.1 of the notice points to. Their invoices must be marked "SELF-BILLING" (a sentence the notice gives the force of law), and HMRC advises adding "The VAT shown is your output tax due to HMRC".

Self-employed suppliers who are not VAT registered. Section 4.1 says you must not issue self-billed VAT invoices "on behalf of suppliers who are not registered, or who have cancelled their VAT registration". GOV.UK adds that if a supplier stops being registered "you can continue to self-bill them, but you cannot issue them with VAT invoices", that the arrangement "is no longer covered by the VAT regulations", and that "you do not add any VAT to self-billed invoices that you issue to suppliers who are not VAT registered".

For these suppliers, use a payment statement that shows no VAT, no VAT number and no "output tax" line, and is not described as a VAT invoice. The VAT rules do not require a written agreement for this, but we recommend agreeing in writing that you will prepare these statements.

How long does a self-billing agreement last?

The agreement runs for the period it states. Regulation 13(3B)(a) requires it to authorise self-billing "for a specified period". When SI 2003/3220 first inserted that paragraph, it capped the period at 12 months or the contract term; SI 2012/2951 removed those words from 1 January 2013. HMRC's guidance, which sets no legal limit, still sets the practical pattern:

• the notice requires a start date and expiry date, with the expiry "related to the term of any contract" if you choose;
• section 3.3.1 says that if self-billing terms are "included in the terms of the contract, the agreement will last until the end date of the contract";
• section 3.3.2 says "It is advisable to carry out a review every 12 months", to confirm the supplier is "still VAT-registered" and "happy to continue";
• GOV.UK says agreements "usually last for 12 months".

To carry on after the expiry date, section 3.3.1 says you need to review the agreement so you can show HMRC the supplier has agreed to accept your invoices "for a further period", and "agree a new period for self-billing".

How do you renew 200 agreements without a gap?

If everyone signed on the same day, everyone expires on the same day. Section 3.3.3 anticipates this: where agreements "all expire on the same date … you may review them on a rolling basis spread over 6 to 12 months". It adds that "you should set the appropriate time limits on your original agreements when they're made" and "You must avoid self-billing a supplier at any time when you do not have their written agreement to do so." Where agreements were made on different dates, "review each agreement on its expiry date".

A workable rolling schedule:

1. Stagger expiry at signing. Spread expiry dates across 6 to 12 months, for example by site, so a share falls due each month.
2. Work a review list each month. List agreements expiring in the next 60 days.
3. Re-check before renewing. Confirm the VAT number and address with HMRC's checker.
4. Get the renewal in writing before expiry. A new period, start and expiry date, signed or accepted electronically.
5. Hold self-billing for anyone not renewed. If an agreement lapses, stop VAT self-billing that supplier until a new one is in place, and pay them on their own invoices meanwhile.
6. Slot new starters in. Give each new agreement an expiry in a lighter month.

Alternatively, putting the self-billing terms in each contract means the agreement lasts as long as the contract.

What ends an agreement early?

Regulation 13(3C) says an agreement "shall be treated as having expired" when:

• "the business of the supplier is transferred as a going concern";
• "the business of the customer is transferred as a going concern";
• "the supplier ceases to be registered for VAT".

The notice adds that a supplier who changes VAT registration number cannot be self-billed "until you have drawn up a new self-billing agreement with them", and section 4.3 says that if you buy a business that self-bills, "you must make a new self-billing agreement with each supplier". When someone stops working with you, close the agreement as part of the exit; see offboarding self-employed workers.

What should you keep on file?

Section 4.4 says you remain responsible, even if a third party issues the invoices, for "setting up and reviewing self-billing agreements", "keeping copies of those agreements", "keeping the names, addresses and registration details of your suppliers" and producing them when HMRC asks. Per supplier, keep:

• the signed agreement and every renewal, with start and expiry dates;
• name, address and VAT number, and the date you last checked it;
• any notice of a change in VAT status, new number or business transfer;
• the name of any third party issuing the invoices.

Our record-keeping guide shows where these sit in the wider audit file.

Where do operators usually slip up?

• Self-billing before the agreement exists. Section 3.4 says invoices without an agreement "are not evidence of your entitlement to input tax", and HMRC may assess and charge a penalty.
• Invoices for a supplier who has deregistered. The agreement has already ended under regulation 13(3C).
• The supplier sends their own invoice too. They agreed not to (section 6.3), and section 4.7 says you cannot claim input tax on their sales invoice for a supply you have already self-billed.
• Treating the agreement as a status decision. It does not make anyone self-employed. Employment status is fact-specific; see GOV.UK on employment status and HMRC's Check Employment Status for Tax (CEST) tool. Self-billing is also not the Construction Industry Scheme, which covers construction work only.

How Zerity helps

Zerity is one operating system for compliance and operations across your self-employed workforce. For self-billing:

• The driver signs the self-billing agreement during onboarding, and the signed copy is kept on their record. See invoicing and self-billing software.
• Invoices are raised from the agreed rate and days worked, and the PDF is kept.
• The VAT position is recorded for each driver, and UTR and VAT details sit on the record.
• The rota is published to the driver app, and days worked feed the self-bill.
• Drivers are tagged by depot and network, and one account covers every site you run. See subcontractor driver management.
• Every licence and policy expiry date is tracked in one place.

The software does not make the arrangement compliant on its own. The agreement terms, the VAT checks and the renewals stay with you, and Zerity does not decide anyone's employment status. Zerity is free for operators.

Book a demo to see agreements, rates and self-billed invoices in one place.

Common questions

Do I need HMRC approval for a self-billing agreement?

No. VAT Notice 700/62 says you do not need HMRC authorisation to operate self-billing. You need each supplier's written agreement and must meet the notice's conditions.

What must a self-billing agreement include?

The supplier's agreement that you raise their invoices, that they will not issue VAT invoices for covered supplies and will accept yours; start and expiry dates; a promise to tell you about deregistration, a new VAT number or a transfer of the business as a going concern; and any third party issuing the invoices. It must be in writing, and you must be able to show it to an HMRC visiting officer who asks.

How long does a self-billing agreement last?

For the period it specifies, with start and expiry dates; the expiry can follow your contract term. HMRC advises a review every 12 months.

Can I self-bill a supplier who is not VAT registered?

Not with a self-billed VAT invoice. GOV.UK says you can continue to self-bill such a supplier, but without VAT and outside the VAT self-billing rules.

What happens to the agreement if a supplier sells their business?

If they transfer it as a going concern, it is treated as expired, as it is if the supplier stops being VAT registered. To keep self-billing, make a new agreement with the new owner before the next invoice.

Sources

• HMRC, Self-billing (VAT Notice 700/62)
• HMRC, example self-billing agreement (PDF)
• GOV.UK, VAT: self-billing arrangements
• Value Added Tax Regulations 1995, regulation 13
• The Value Added Tax (Amendment) (No. 6) Regulations 2003 (SI 2003/3220), regulation 4
• The Value Added Tax (Amendment) (No. 3) Regulations 2012 (SI 2012/2951), regulation 2
• HMRC, VATREC15010 and VATREC15020
• GOV.UK, Check a UK VAT number
• GOV.UK, Employment status
• GOV.UK, Check employment status for tax
• GOV.UK, Construction Industry Scheme