ITAX - Settlement discounts & VAT

Geoff_H

Until April this year VAT was always invoiced and charged as if any settlement discount offered was taken, but since then VAT is calculated on the amount actually paid. I've done a couple of mocks for the ITAX exam and both use the old system in the model answers. Does anyone know if the live exam has been updated or do we have to use the old system?

kelsmick

I didn't know the rules on VAT on discounts had changed? There was nothing in my textbooks regarding this and I can't see anything on the HMRC website on it? https://www.gov.uk/vat-businesses/discounts-and-free-gifts it still states to charge it on the discounted price.

I did my ITAX exam a few months ago and I calculated mine on the VAT charged on the discounted price.

CeeJaySix

The policy change is here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293888/TIIN_9022_VAT_prompt_payment_discounts_.pdf

But, as it seems for all exams across all professional bodies, current exams are based on the prior year budget (I assume to avoid having to update papers every time the government make a change). Therefore you're safe for ITAX this year - work on the discounted net value.

Geoff_H

CeeJaySix said:

The policy change is here: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/293888/TIIN_9022_VAT_prompt_payment_discounts_.pdf

But, as it seems for all exams across all professional bodies, current exams are based on the prior year budget (I assume to avoid having to update papers every time the government make a change). Therefore you're safe for ITAX this year - work on the discounted net value.

Thank you.