A Prompt Payment Discount (PPD) is an offer by a supplier of a reduction in the price of goods and/or services if the customer pays promptly, that is, after an invoice has been issued and before full payment is due. Currently, suppliers making PPD offers are able to account for the VAT due on the discounted price, even if the full price is subsequently paid. Customers may only recover as input tax the VAT stated on the invoice.

Paragraph 4, Schedule 6, VATA, has been amended so that suppliers must account for VAT on the amount they actually receive and customers may recover the amount of VAT that is actually paid to the supplier. For supplies of broadcasting and telecommunication services the change took effect from 1 May 2014. For all other supplies the change takes effect on 1 April 2015. Detailed guidance is contained in Business Brief 49/2014.

To read Business Brief 49/2014 click here.