Forum

• # 72384
• Tue 21 Jun 2011 02:49 PM

Hi Guys, i am wondering if those of you with your experience can help me!!

I have a supplier who offers me cash discount on their invoices. Now sometimes, the invoices are paid after the cash discount date, so the discount is not taken. However the VAT is calculated to assume that we will take the discount.

When we send payment, we pay the VAT as shown on the invoice, however the supplier is telling us we should be adding the VAT back on to the invoices before payment? None of our other suppliers request this, and i do not beleive that this is correct as i thought we pay the VAT that is shown on the invoice.

I would really appreciate it if someone could clarify this for me.

Thanks

• Shelli
• 
  Quote
  

• # 72816
• Wed 06 Jul 2011 08:59 PM

Hi Shelli,

Assuming you haven't got your answer by now.....they are incorrect.  The VAT is calculated at the discounted rate...if you pay on time and take the discount, it is deducted from the gross amount of the invoice.  If you don't pay in time then you don't take the discount and pay the full amount of the invoice.  The VAT in both cases stays the same.

HTH
Pauline

• 
  Quote