Who pays the VAT on a self-billed invoice?

The supplier. The customer writes the invoice and pays the VAT-inclusive amount, but the VAT shown is the supplier's output tax, which it must declare.

Do I need permission to self-bill?

In the UK, no HMRC authorisation is needed, but a written agreement must be in place before self-billing starts. In Saudi Arabia both parties must notify ZATCA, and the agreement must precede the supply.

What must a self-billed invoice say?

That it is self-billed: 'SELF-BILLING' in the UK, 'Self-billing' under the EU directive, 'buyer-created tax invoice' in the UAE, and 'Self-Billing Tax Invoice / Issued on Behalf of the Supplier' in Saudi Arabia.

Term

Self-billing

Self-billing is an arrangement in which the customer prepares the supplier's invoice and sends a copy with the payment — common when a shipper pays carriers from its own records of delivered loads. It needs a prior agreement and a way for the supplier to accept each invoice, and the invoice must say 'self-billing'. The supplier still owes the VAT.

Also called self-billed invoice, self-billing agreement, buyer-created tax invoice, self-billing VAT, reverse invoicingUpdated 13 October 2026

What the rules require

Where	Agreement	Invoice wording
UK (HMRC Notice 700/62)	In place before self-billing starts; review advised every 12 months; no HMRC authorisation needed	'SELF-BILLING'
EU (VAT Directive Art. 224)	Prior agreement, and a procedure to accept each invoice	'Self-billing'
UAE (Federal Tax Authority)	The recipient must be registered for VAT	'Buyer-created tax invoice'
Saudi Arabia (ZATCA, May 2026)	Agreed before the date of supply; both parties notify ZATCA	'Self-Billing Tax Invoice / Issued on Behalf of the Supplier'

Saudi Arabia adds a deadline: a self-billed tax invoice is issued no later than 15 days from the end of the month in which the supply was made. In every case the VAT on the invoice is the supplier's: HMRC tells self-billees that the VAT shown on the invoice is their output tax.

Worked example: ZATCA's own

Supply SAR 13,800.00 + VAT 15% SAR 2,070.00 = SAR 15,870.00 on the self-billed invoice → supplier accounts for output tax of SAR 2,070.00

From ZATCA's guideline on tax invoicing, version 3, May 2026 (Example 11). The customer prepares the invoice; the supplier declares the tax.

In freight

Self-billing suits a shipper that already holds the facts of each load — the lane, the agreed rate, the proof of delivery — and would otherwise wait for dozens of carriers to invoice. It replaces checking each carrier's invoice with each carrier checking the shipper's, so it works only where the rate and the delivery record are already agreed.

The mistake people make

Booking self-billed invoices on the wrong side. HMRC says self-billees sometimes make the mistake of treating their self-billed invoices as purchase invoices — when they are sales invoices the supplier must account for. A carrier that reclaims the VAT instead of declaring it has the arithmetic backwards.

FAQ

Self-billing: common questions

Who pays the VAT on a self-billed invoice?: The supplier. The customer writes the invoice and pays the VAT-inclusive amount, but the VAT shown is the supplier's output tax, which it must declare.
Do I need permission to self-bill?: In the UK, no HMRC authorisation is needed, but a written agreement must be in place before self-billing starts. In Saudi Arabia both parties must notify ZATCA, and the agreement must precede the supply.
What must a self-billed invoice say?: That it is self-billed: 'SELF-BILLING' in the UK, 'Self-billing' under the EU directive, 'buyer-created tax invoice' in the UAE, and 'Self-Billing Tax Invoice / Issued on Behalf of the Supplier' in Saudi Arabia.