HM Revenue and Customs Brief 67/07
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Issued 9 November 2007
VAT: Rebates and credit notes relating to customer discounts and associated
payments
This Revenue & Customs Brief article explains the VAT treatment of rebates,
credit notes and similar transactions relating to business promotions between
suppliers and their customers.
Background
Revenue & Customs Brief 08/07 explains the VAT treatment of manufacturers’
cash back payments. That brief covers payments that occur outside the direct
supply chain. This brief explains the correct VAT treatment for supplier
discounts, volume rebates and charges made by the customer when promoting the
suppliers’ products.
The attached table outlines the differing forms that these transactions take
and their VAT treatment.
With effect from 1 January 2008, you are required to apply the correct VAT
treatment as outlined. We do not wish to create any unnecessary business cash
flow problems where there is little or no revenue at risk. Therefore, no
retrospective action will be taken on transactions occurring before that date.
Customer discounts – a glossary of terms (PDF 32K) - http://www.hmrc.gov.uk/briefs/vat/brief6707-glossary.pdf
© Crown Copyright 2007.
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