VAT Changes to Prompt Payment Discounts
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20th March 2014 The VAT People
HMRC have announced changes to the VAT rules regarding
prompt payment discounts.
Over several years many of our clients have taken
advantage of the VAT rules relating to prompt payment discounts.
Essentially the VAT rules for prompt payment
discounts are such that if you offer a prompt payment discount and the
does not pay promptly (and therefore pays the higher amount) you only
need to account
for VAT on the discounted amount. This
method of discounting can therefore be particularly advantageous if you
supplying goods or services to notoriously slow payers.
HMRC have identified that prompt payment discounts are
being increasingly used in situations where customers are unable to
VAT, particularly the telecommunications and broadcasting arenas. They
have identified that where the payments
are not made promptly these is a loss to the Revenue (estimated to be
£3.5M). Therefore the current VAT rules from prompt
payment discounts will be changed so that VAT will always be accounted
the amount received. These changes come
into effect on the following dates:-
- supplies of telecommunication and broadcasting services
where there is no obligation to provide a VAT invoice - 1 May 2014
- all other supplies - the measure will have effect for
supplies made on and after 1 April 2015
Please refer to the link
for further details of the changes.
Business promotions and discounting can be complex from a
VAT perspective, please do not hesitate to contact us should you have
questions regarding this change or any other VAT issues relating to
About the Author
VAT People are leading VAT and Customs Duty
consultants based in the
North West of England. We work with a wide range of businesses
throughout the UK as well as assisting our accountancy colleagues to
unravel the thorny VAT issues for their clients. We are one of the UK's
largest and most comprehensive sources of VAT and Customs advice, our
consultancy team having over 140
years of experience in VAT and Customs
gained in either HMRC or a Big 4 accountancy practice environment.
Call us on our VAT helpline 0800 077 4604 to discuss. All initial discussions are free with no-obligation.
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Article Published/Sorted/Amended on Scopulus 2014-04-02 09:06:18 in Tax Articles