VAT payment discounts

VAT prompt payment discounts

From: Andrew Stephenson

Business are reminded that they only have until 31 March 2015 to take advantage of the current rules on accounting for VAT where a discount for prompt payment is offered.

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Under the current rules, when an invoice is issued showing details of a discount for prompt payment they only have to account to HM Revenue & Customs for the VAT due on the discounted price whether or not their client or customer takes advantage of it.

 VAT Discount Link

Discounts, vouchers, special offers and VAT

There are particular rules for accounting for VAT on promotions such as multi-buy offers eg, buy-one-get-one-free (BOGOF), coupons, vouchers and manufacturers’ support of retail promotions. If any of your goods or services are discounted, you must charge VAT on the discounted price rather than the full price. If you give away products, you must usually account for, and pay VAT on, the full value or cost of the gift, although there are some exceptions.

From 1 April next year however the rules are changing so that VAT will have to be accounted for on the amount actually received in payment.

If you wish to know more about this contact our senior VAT Manager, Andrew Stephenson.