Revenue & Customs Brief 6/2019 explains the new rules from 1 September 2019 for adjustments to VAT following increases or reductions in the price of goods or services. These new rules are set out in the Value Added Tax (Amendment) Regulations, SI 2019/1048, laid in June.
Suppliers must issue debit notes in respect of price increases and credit notes in respect of price decreases no later than 14 days after an increase is agreed with the customer, or in the case of a decrease, from when the refund is made to the customer. These adjustments must then be accounted for in the VAT period in which price changes occur.
The revised rules are intended to put beyond doubt that adjustments may only be made under reg 38 of the VAT Regulations 1995 to reduce the amount of VAT paid to HMRC when a refund is actually made. They specify that ‘payment’ by a supplier to a customer in relation to a decrease in price is any payment in money, although it may also include an offset against an existing liability.
Revenue & Customs Brief 6/2019 explains the new rules from 1 September 2019 for adjustments to VAT following increases or reductions in the price of goods or services. These new rules are set out in the Value Added Tax (Amendment) Regulations, SI 2019/1048, laid in June.
Suppliers must issue debit notes in respect of price increases and credit notes in respect of price decreases no later than 14 days after an increase is agreed with the customer, or in the case of a decrease, from when the refund is made to the customer. These adjustments must then be accounted for in the VAT period in which price changes occur.
The revised rules are intended to put beyond doubt that adjustments may only be made under reg 38 of the VAT Regulations 1995 to reduce the amount of VAT paid to HMRC when a refund is actually made. They specify that ‘payment’ by a supplier to a customer in relation to a decrease in price is any payment in money, although it may also include an offset against an existing liability.
