The above consultation examines VAT invoicing and accounting arrangements when prompt payment discounts are taken up in relation to supplies made on or after 1 April 2015.

Changes to UK legislation relating to prompt payment discounts will take effect in relation to supplies made on or after 1 April 2015. From that date, the way many businesses account for VAT when offering prompt payment discounts will change. Currently businesses can issue invoices that give details of the amount of the prompt payment discount and its terms and show the VAT due calculated on the discounted price.

If the discount is not taken up HMRC has not required businesses to alter the amount of VAT invoiced and accounted for. After the change businesses must account for VAT on the consideration they actually receive.

HMRC would like to receive views or suggestions on how the businesses affected should make consequent accounting adjustments. These will be used to inform any guidance HMRC may issue. Responses are due by 9 September 2014.