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VAT on discounts

  • Member
  • Practice Licence
  • 179 posts
  • # 111560

Hello

I am wondering about the double entry procedures for dealing with VAT on discounts since the April 2015 change in the law. I have had a good look around the internet - possibly the wrong places - and cannot find a standard method. Does that mean there isn't one? If there is one, could someone point me in the right direction please.

If I make a credit sale, do I put the discounted VAT figure into the VAT control account or the non-discounted VAT. Whichever I use, it may be the wrong figure so do I then make a second entry in the VAT control account.

If due to the time lapse I pay HMRC incorrectly, can I claim it back next month?

Thank you

Peter


 



Edited at 04 Nov 2015 02:28 PM GMT

Edited at 11 Nov 2015 11:10 AM GMT

  • Companion Fellow
  • 82 posts
  • # 111678

Hi - I have just seen that no one else replied to your query so am jumping in here. From 1 April 2015 you can no longer discount the VAT for prompt payment when issuing an invoice. You have to add a note to the invoice to explain how to deal with the situtation. The link below takes you to the full explanation on the GOV.UK website (or simply search on prompt payment discount in any search engine and follow the link).

https://www.gov.uk/government/publications/revenue-and-customs-brief-49-2014-vat-prompt-payment-discounts/revenue-and-customs-brief-49-2014-vat-prompt-payment-discounts

Hope it helps

 

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