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Finance Act 2014

Section 108: VAT: Prompt Payment Discounts


1.This section replaces paragraph 4 of Schedule 6 to the Value Added Tax Act 1994. It will ensure that where suppliers offer prompt payment discounts to customers that VAT is declared on the consideration actually received.

Details of the Section

2.Subsection 1 introduces the new paragraph 4 to Schedule 6 to the Value Added Tax Act 1994.

3.Subsections 2 to 4 deal with the commencement provisions.

Background Note

4.The Principal VAT Directive (PVD) requires VAT to be accounted for on the consideration actually received.  Existing UK legislation may be interpreted as being in line with the PVD but has a degree of ambiguity so is being amended to provide clarity on the VAT treatment of prompt payment discounts.

5.This measure will for supplies of telecommunication and broadcasting services where there is no obligation to provide a VAT invoice, have effect for supplies made on and after 1 May 2014.  For all other supplies the measure will have effect for supplies made on and after 1 April 2015; unless, for revenue protection purposes, it is necessary to bring forward the implementation date for specified supplies.

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