VAT Treatment Of Discounts - UK 2015

(Doc ID 1924605.1)

Last updated on OCTOBER 28, 2015

Applies to:

Oracle Fusion Receivables - Version 11.1.5.0.0 and later
Oracle Fusion Payables - Version 11.1.5.0.0 and later
Oracle Fusion Receivables Cloud Service - Version N/A and later
Oracle Fusion Payables Cloud Service - Version N/A and later
Oracle Fusion Tax Cloud Service - Version N/A and later
Information in this document applies to any platform.

Goal

 VAT Treatment of Discounts - UK 2015

Problem Description
---------------------------------------------------
change in the tax rules as from 2015

From 1 April 2015 the VAT amount need only be
adjusted if the discount is taken up by the customer. These will be dealt
with through the issue of debit notes or receipt of credit notes for the
adjustment. These will need to be generated or entered into the system in
the same manner as a purchase invoice following the tax liability of the
original supply.
This is a key design point in order to prevent the discount being taken up
and no corresponding VAT adjustment taking place.


HM Customs
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293888/TIIN_9022_VAT_prompt_payment_discounts_.pdf

VAT: prompt payment discounts

Who is likely to be affected?
Any VAT registered businesses that offer their customers a prompt payment discount and
those customers.
General description of the measure
An amendment to VAT legislation on prompt payment discounts (PPD) to clearly align UK
VAT legislation with EU VAT legislation.
Policy objective
This measure will protect revenue by putting it beyond doubt that UK VAT legislation on
PPDs is aligned with EU VAT legislation and ensuring VAT is accounted for on the full
consideration paid.

Solution

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