- Recent Upper Tribunal case highlighted complexities regarding VAT accounting and prompt payment discounts
- TalkTalk Telecom Limited v HMRC [2024] UKUT 00284 case involved a ‘Speedy Payment Discount’ of 15%
- TalkTalk accounted for VAT on discounted amount even if customers did not pay within 24 hours
- HMRC disagreed and assessed for under-declared VAT
- First Tier Tribunal and Upper Tribunal upheld HMRC’s view
- Contractual arrangements between customer and TalkTalk were key in determining VAT treatment
- Reminder to take care when accounting for VAT with discounted consideration
- From April 2015, VAT is accountable on amount paid by customer
- Suppliers can handle invoicing in two ways to account for prompt payment discounts
- Businesses should ensure VAT accounting and invoicing for prompt payment discounts are correct.
Source: saffery.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
