What is the basic tax point?

The basic tax point is the date of dispatch because it marks the point in time when ownership of goods is transferred from the seller to the buyer, which is crucial for determining when the sale occurs for tax purposes. It establishes the earliest moment at which a transaction can be treated as complete under VAT regulations.

In VAT systems, identifying the correct tax point is fundamental in ascertaining when VAT becomes chargeable. If goods are dispatched on a particular date, this date is typically when the supplier is obliged to account for VAT, assuming no invoice has been issued beforehand. This can help businesses manage their tax obligations and cash flow more effectively.

When considering the other options, while the date of invoicing and date of payment can play significant roles in establishing tax liabilities under specific conditions, they do not represent the basic tax point. The date of agreement, while important in the contractual context, does not indicate when the VAT liability arises in the same way the date of dispatch does. Thus, the date of dispatch clearly aligns with the definition and application of the basic tax point in indirect tax considerations.