VAT: Prompt Payments Discount (PPD) Legislation Changes April 2015

From 1st April 2015, businesses must account for VAT on the full consideration received for supplies of goods and services. Therefore invoices must calculate VAT with no reduction for Prompt Payments Discounts (PPD).

Where a discount is subsequently taken, it is therefore necessary to ensure VAT records are amended to reflect the lower VAT amount.

Currently where businesses offerPPD termsto customers, they calculate the VAT due on the discounted price. If the discount is not taken up, HMRC does not require businesses to alter the amount of VAT invoice and accounted for.  

Full details will be found in the attached document. For further information from Revenue and Customs please click here. 

Please contact your consultant to discuss the implications for your version of Sage ERP system and your company.