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HMRC have published the consultation VAT: Prompt Payment Discounts to review invoicing and accounting arrangements when prompt payment discounts are taken up in relation to supplies made on or after 1 April 2015.
There will be a change from that date in the way many businesses account for VAT when offering prompt payment discounts will change.
HMRC have published the consultation VAT: Prompt Payment Discounts to review invoicing and accounting arrangements when prompt payment discounts are taken up in relation to supplies made on or after 1 April 2015.
There will be a change from that date in the way many businesses account for VAT when offering prompt payment discounts will change.
Firms can currently issue invoices that give details of the amount of the prompt payment discount and its terms, and show the VAT due calculated on the discounted price.
There is no need to alter the amount invoiced and accounted for if the discount is not taken up – but businesses will have to account for VAT on the consideration they actually receive from 1 April 2015.
HMRC are asking for suggestions – via email by 9 September – on how the firms affected should make consequent accounting adjustments. Responses may be used to inform tax department guidance.
