Accounting rules tightened from September

HMRC is changing the rules on accounting for VAT from 1 September 2019. The changes relate to adjustments for VAT after increases or reductions in the price of goods or services specifically where the amount paid changes after the VAT has been accounted for to HMRC. 

The department believes some businesses are trying to gain a tax advantage through the current regulations by making VAT adjustments for reductions in price without refunding their customers. Some businesses also attempt to treat errors as price adjustments so as to avoid relevant time limits. 

The new brief addresses these issues by making amendments to Part 3 and Part 5 of the VAT Regulations 1995.

Under the new rules the time an increase in price occurs will be when the change is agreed by both the supplier and the customer. A debit note must be issued no later than 14 days after the price increase and...