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Under the general rule described in V3.131, a supply of goods or services may be treated as taking place when the person making the supply receives a payment in connection with it. The supply is treated as taking place at the time when the payment is received and is treated as taking place only to the extent covered by the payment¹, eg a payment of £100 in connection with a supply the consideration for which is £300 gives rise to a tax point only in connection with the £100 payment, not the full £300.

A payment in these circumstances is frequently referred to as a 'deposit', 'payment in advance', 'stage payment' or some similar description. However, whatever term is applied, the essential elements are that the payment is²:

1. Ìý

   (1)ÌýÌýÌýÌý made in connection with a supply contemplated by the contract made by the parties

2. Ìý

   (2)ÌýÌýÌýÌý to be treated as a total or partial payment for the goods or services to be supplied under the contract

3. Ìý

   (3)