Is this company in the wrong regarding VAT? 1 answer below »

We received an invoice with a total value of 204.21. This included 170.48 total and 33.73 VAT. VAT at 20% of 170.48 should be 34.01. We rang up and queried. The reason for the difference is the VAT is taken on a 2.5% settlement discount. e.g they assume everyone is taking the settlement discount and charge VAT on this but keep the goods value the same. We said we aren't paying it early so aren't eligible for the early settlement discount. They answered with that the VAT remains the same anyway. Surely it should either be we get the settlement discount on both the VAT and goods value or neither? What are your thoughts?

1 Approved Answer

3 Ratings, (9 Votes)
When a Company pays VAT, they do so as follows :@- 1) First they add up all the VAT they already paid on incoming stock, supplies ect. 2) next they add up the 'before VAT' price of ALL the goods they sell (that are liable for VAT) 3) Then they work out 20% of (2), subtract (1) and pay HMRC the difference .. THUS what...
Submit Your Questions Here !
Copy and paste your question here...
Attach Files