HMRC Self-Billing Rules for Courier Depots
Quick answer. HMRC self-billing is the VAT Notice 700/62 arrangement where the customer prepares the supplier's VAT invoice. A courier depot needs a written agreement first. HMRC has not required prior approval since 1 January 2004. The supplier must agree, and must not invoice the same supply.
Reviewed on 25 September 2026 against VAT Notice 700/62, GOV.UK's self-billing arrangements page, and HMRC's VAT Trader Records manual. This is an operator's guide, not tax advice, and it is not an agreement.
- What self-billing is
- What the agreement has to say
- Why depots use it
- What breaks the invoice
- What self-billing does not decide
- What Zerity stores
- Common questions
- Sources
What self-billing is
VAT Notice 700/62 is the source. Self-billing is a commercial arrangement in which the customer prepares the supplier's invoice and forwards a copy to the supplier with the payment. In a depot, the customer is the business that pays the driver. The supplier is the driver, or the driver's company, when that supplier is VAT registered.
You may issue self-billed invoices only if the supplier has agreed, a self-billing agreement is in place, and you follow paragraph 4.1 of the notice. You do not need HMRC authorisation. VATREC15010 dates that position to 1 January 2004. The agreement must exist before self-billing starts. A Friday pay run does not create it.
VAT: self-billing arrangements says the same thing from the customer's side. With no agreement, the self-billed invoices are not valid VAT invoices, and the input tax on them cannot be reclaimed.
HMRC publishes an example in section 8 of the notice, as a PDF. Use that example, or write your own with every required point. This page is a checklist. Copying a heading onto a rate card does not make an agreement.
What the agreement has to say
The notice lists what a valid agreement must do. The legal base it cites is regulations 13(3) and 13(3A) to 13(3F) of the VAT Regulations 1995. VATREC15020 points at the same regulations. Check the notice on the day you draft the clause.
- The supplier agrees that the customer will raise the invoices for the supplier's supplies.
- The supplier will not raise VAT invoices for supplies covered by the agreement.
- The supplier will accept each self-billed invoice for those supplies.
- There is a start date and an expiry date. The expiry can be the end of the contract.
- It binds both sides, in writing, on paper or electronically.
- The supplier will say if they stop being registered, transfer the business as a going concern, or move to another VAT number.
- It says so if a third party will issue the invoices.
The regulations require a specified period ending no later than 12 months, or no later than the end of the contract for those supplies. If the terms sit inside the contract, the notice says they last until the contract ends. If the agreement is separate, agree a new period when it ends. HMRC says a review every 12 months is advisable, including to confirm the supplier is still registered and still content. You must be able to produce the agreement if an officer asks. Do not self-bill into a gap.
The invoice is a separate document. It must show the supplier's name, address and VAT registration number, and the other details of a full VAT invoice. The notice gives this sentence the force of law: each self-billed invoice must be clearly marked SELF-BILLING. HMRC also advises the words "The VAT shown is your output tax due to HMRC", so the supplier does not treat that VAT as their own input tax.
Keep a list of suppliers: name, address and VAT number. Check a number with Check a UK VAT number. A new VAT number, a deregistration, or a transfer of the business means a new agreement before you self-bill again. If a third party prints the invoice, the notice says you remain responsible for the agreements, the copies and the supplier list.
Why depots use it
The notice says self-billing can help where the customer, not the supplier, determines the value after the supply. A depot knows the stops, the deductions and the rate. VATREC15010 notes that the arrangement is used extensively by traders contracting with road hauliers, because the customer is often best placed to value the job. That is an observation about the trade. It is not an instruction to start without an agreement, and it is not a reason to get the VAT treatment wrong. The notice says the self-biller is responsible for the correct VAT liability on the invoice.
What breaks the invoice
| What went wrong | What the notice requires |
|---|---|
| Driver is not VAT registered | Do not issue a self-billed VAT invoice, and do not claim input tax. |
| Driver also sends an invoice | The supplier must not invoice a supply the agreement covers. |
| Agreement missing or expired | The self-billed invoice is not evidence of input tax. |
| VAT number changed | Stop until a new agreement is in place. |
A driver who is not VAT registered cannot be issued a self-billed VAT invoice. The notice forbids that, and it forbids one for a supplier who has cancelled their registration. Input tax cannot be claimed. This guide does not set the registration threshold. If the driver is not on the register, pay them without a VAT invoice.
A second invoice for the same supply breaks both sides. The supplier must not raise a sales invoice for a covered transaction. The customer cannot claim input tax on that sales invoice as well. If the rules are broken, the notice says the self-billed documents are not proper invoices and the supplier has to issue their own. Correct a price with a debit note. Do not quietly cut the next invoice.
An expired agreement is the same as no agreement. Section 3.4 says the invoices are then not evidence of input tax, and HMRC may assess the tax and charge a penalty. A VAT number that changed on Monday stops the old agreement until a new one exists. The supplier must tell you at once. Do not wait for the year end.
The tax point is not always the day you send the payment. Section 5 of the notice says the normal tax point rules apply, with a specific case where a self-billed invoice issued within 14 days of the basic tax point creates a tax point. Read that section before you treat every Friday as the tax point.
What self-billing does not decide
The agreement does not decide employment status. Employee, worker and self-employed for rights are a different test, in the employment status guide. It does not decide IR35. That tax question is in IR35 explained. It does not decide the right to work check, which is in the right to work guide for self-employed couriers. Do not read a self-billed invoice as proof that a driver is self-employed.
What Zerity stores
Zerity stores the agreement and the pay run. The depot still has to put the supplier's name, address and VAT number on the invoice, with the rest of a full VAT invoice and the SELF-BILLING mark. self-billing agreement software is the product page for that file. A live pay run does not switch over in a day.
Courier compliance software and driver compliance software hold the driver file. They do not register anyone for VAT, and they do not replace the agreement an officer can ask to see.
Common questions
Does a self-billing agreement expire?
Yes. The notice requires a start date and an expiry date, unless the expiry is the end of the contract that contains the agreement. The specified period ends no later than 12 months or the end of that contract. Agree a new period before the next self-billed invoice. A review every 12 months is advisable. An invoice with no live agreement is not evidence of input tax.
Which VAT number goes on a self-billed courier invoice?
The supplier's VAT registration number, with the supplier's name and address, plus the other details of a full VAT invoice. Mark it SELF-BILLING. If the number changes, stop until a new agreement exists. Check the number on HMRC's service, and keep it on the supplier list.
Can we force a driver to accept self-billing?
HMRC will not insist that a supplier agrees. VATREC15010 says a trader who does not want self-billing should not be forced into it, though commercial pressure may influence the decision. The notice says the same: HMRC will not insist, but the customer may make self-billing a condition of doing business. There is still no valid VAT invoice until the supplier has agreed in writing.
What if the driver is not VAT registered?
Do not issue a self-billed VAT invoice, and do not claim input tax. The notice forbids those invoices for suppliers who are not registered or who have cancelled their registration. You can still pay the driver. Whether they ought to be registered is a separate question.
What if the driver also sends their own invoice?
The supplier agreed not to invoice the covered supplies. You cannot claim input tax twice, or on their sales invoice for a supply you have already self-billed. If the rules are broken, the self-billed documents are not proper invoices and the supplier has to issue their own. See VAT Notice 700/45 if input tax has already been claimed in error.
Sources
- Self-billing (VAT Notice 700/62), HMRC.
- VAT: self-billing arrangements, GOV.UK.
- VATREC15010 and VATREC15020.
- Example agreement (PDF), published with the notice.
- Check a UK VAT number.
Zerity Editorial Team
The Zerity team writes about fleet management, compliance, and scaling logistics businesses — drawing from hands-on experience helping UK courier companies streamline operations.
