Commentary

V7.201 Cash accounting scheme—prompt payment discount

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.201 Cash accounting scheme—prompt payment discount

Part V7 Tax planning | Commentary

V7.201 Cash accounting scheme—prompt payment discount

With a prompt payment discount a customer receives a discount if they pay within a certain time, for example, 5% within 14 days of the invoice date. Prior to the changes noted at the following two bullet points, the consideration for VAT purposes was reduced by a prompt payment discount even when the customer did not take advantage of the prompt payment discount. This meant that businesses, including businesses using the cash accounting scheme, accounted for output tax according to the amount of VAT shown on the invoice, which was previously calculated on the

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