We buy from a wholesaler (WHS)
HP (the supplier to the WHS) have a promotion runnng, whereby
we send copies of our purchase invoces from WHS to HP for a cashback.
NOw, we have claimed the vat back on the WHS invoice, but there is no docs 
from HP
for the cashback, HP claim we should account for our own tax liabilites
So, do I invoice HP for the cashback, knowing full well HP will not process 
the invoice their end?
Can I self bill (in this case credit)?
I'm sure I'm in for the vat here, but Customs are clueless too at the mo, 
will coe back to me in a week!
TIA
-- 
Vass

On 22 Apr, 18:53, "Vass"  wrote:
> We buy from a wholesaler (WHS)
> HP (the supplier to the WHS) have a promotion runnng, whereby
> we send copies of our purchase invoces from WHS to HP for a cashback.
> NOw, we have claimed the vat back on the WHS invoice, but there is no docs
> from HP
> for the cashback, HP claim we should account for our own tax liabilites
> So, do I invoice HP for the cashback, knowing full well HP will not process
> the invoice their end?
> Can I self bill (in this case credit)?
> I'm sure I'm in for the vat here, but Customs are clueless too at the mo,
> will coe back to me in a week!
> TIA
> --
> Vass

Before you do anything, do the sums on the the original payment and
see if you paid the VAT on the Cash Back.

If I offer you a "Cash Discount" - a discount for paying promptly - I
knock the discount off before I calculate the VAT - it makes no
difference whether you take advantage of the discount or not.

This convoluted arrangement may concievably fall under that heading.

On 22 Apr, 18:53, "Vass"  wrote:
> We buy from a wholesaler (WHS)
> HP (the supplier to the WHS) have a promotion runnng, whereby
> we send copies of our purchase invoces from WHS to HP for a cashback.
> NOw, we have claimed the vat back on the WHS invoice, but there is no docs
> from HP
> for the cashback, HP claim we should account for our own tax liabilites
> So, do I invoice HP for the cashback, knowing full well HP will not process
> the invoice their end?
> Can I self bill (in this case credit)?
> I'm sure I'm in for the vat here, but Customs are clueless too at the mo,
> will coe back to me in a week!
> TIA
> --
> Vass

You have to reduce your input tax. You don't have to issue an invoice
or a credit note.

http://www.hmrc.gov.uk/briefs/brief0807.htm

"Troy Steadman"  wrote in message 
news:134128f8-b8f1-4646-9e5f-f549a3d9cab5@l64g2000hse.googlegroups.com...
>
> Before you do anything, do the sums on the the original payment and
> see if you paid the VAT on the Cash Back.
>
to the third party ?

"PeterSaxton"  wrote in message 
news:1f77e1c3-1180-4f02-8eb4-169e9831f10d@a22g2000hsc.googlegroups.com...
> On 22 Apr, 18:53, "Vass"  wrote:
>
> You have to reduce your input tax. You don't have to issue an invoice
> or a credit note.
>
> http://www.hmrc.gov.uk/briefs/brief0807.htm

Great understood, thanks Peter
-- 
Vass

> "Vass" wrote:
>> We buy from a wholesaler (WHS)
>> HP (the supplier to the WHS) have a promotion runnng, whereby we
>> send copies of our purchase invoces from WHS to HP for a cashback.
>> NOw, we have claimed the vat back on the WHS
>> invoice, but there is no docs from HP for the cashback,
>> HP claim we should account for our own tax liabilites
>> So, do I invoice HP for the cashback, knowing
>> full well HP will not process the invoice their end?
>> Can I self bill (in this case credit)?
>> I'm sure I'm in for the vat here, but Customs are clueless
>> too at the mo, will coe back to me in a week!
>> TIA
>> --
>> Vass
>
"PeterSaxton" wrote
> You have to reduce your input tax. You don't
> have to issue an invoice or a credit note.
>
> http://www.hmrc.gov.uk/briefs/brief0807.htm

If the item was originally (say) £188.00 + £32.90 VAT = £220.90,
 and you receive (say) £94 cashback -- paying £126.90 overall
-- then do you reduce the input tax by £16.45 or £14?  In other
words, do you reclaim £16.45 input VAT or £18.90 input VAT?

The webpage referred to above says that "the cash back reduces
the taxable value of your purchase", and I understand that the
'taxable value' is the 'net' amount, ie originally £188 in my example
above.  Thus the taxable value is reduced from £188 to £94,
the VAT on which would be £16.45 (which is also £16.45
less than the VAT on £188).  But then the item will have been:
£110.45 + £16.45 VAT = £126.90 (overall), a VAT rate of
only 14.89% !!!

However, you will have paid £126.90 overall, which
you could consider to be: £108.00 + £18.90 VAT =
£126.90.  Then you'd need to reclaim £18.90 input VAT...

On 23 Apr, 12:48, "Tim"  wrote:
> > "Vass" wrote:
> >> We buy from a wholesaler (WHS)
> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
> >> send copies of our purchase invoces from WHS to HP for a cashback.
> >> NOw, we have claimed the vat back on the WHS
> >> invoice, but there is no docs from HP for the cashback,
> >> HP claim we should account for our own tax liabilites
> >> So, do I invoice HP for the cashback, knowing
> >> full well HP will not process the invoice their end?
> >> Can I self bill (in this case credit)?
> >> I'm sure I'm in for the vat here, but Customs are clueless
> >> too at the mo, will coe back to me in a week!
> >> TIA
> >> --
> >> Vass
>
> "PeterSaxton" wrote
> > You have to reduce your input tax. You don't
> > have to issue an invoice or a credit note.
>
> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> If the item was originally (say) £188.00  £32.90 VAT = £220.90,
>  and you receive (say) £94 cashback -- paying £126.90 overall
> -- then do you reduce the input tax by £16.45 or £14?  In other
> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>
> The webpage referred to above says that "the cash back reduces
> the taxable value of your purchase", and I understand that the
> 'taxable value' is the 'net' amount, ie originally £188 in my example
> above.  Thus the taxable value is reduced from £188 to £94,
> the VAT on which would be £16.45 (which is also £16.45
> less than the VAT on £188).  But then the item will have been:
> £110.45  £16.45 VAT = £126.90 (overall), a VAT rate of
> only 14.89% !!!
>
> However, you will have paid £126.90 overall, which
> you could consider to be: £108.00  £18.90 VAT =
> £126.90.  Then you'd need to reclaim £18.90 input VAT...

Oh dear.

"the taxable value is reduced from £188 to £94" ??? #### #@&!!! :)

Where did you study maths did you say?

>> > "Vass" wrote:
>> >> We buy from a wholesaler (WHS)
>> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
>> >> send copies of our purchase invoces from WHS to HP for a cashback.
>> >> NOw, we have claimed the vat back on the WHS
>> >> invoice, but there is no docs from HP for the cashback,
>> >> HP claim we should account for our own tax liabilites
>> >> So, do I invoice HP for the cashback, knowing
>> >> full well HP will not process the invoice their end?
>> >> Can I self bill (in this case credit)?
>> >> I'm sure I'm in for the vat here, but Customs are clueless
>> >> too at the mo, will coe back to me in a week!
>> >> TIA
>> >> --
>> >> Vass
>>
>> "PeterSaxton" wrote
>> > You have to reduce your input tax. You don't
>> > have to issue an invoice or a credit note.
>>
>> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>>
> "Tim" wrote:
>> If the item was originally (say) £188.00 + £32.90 VAT = £220.90,
>> and you receive (say) £94 cashback -- paying £126.90 overall
>> -- then do you reduce the input tax by £16.45 or £14? In other
>> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>>
>> The webpage referred to above says that "the cash back reduces
>> the taxable value of your purchase", and I understand that the
>> 'taxable value' is the 'net' amount, ie originally £188 in my example
>> above. Thus the taxable value is reduced from £188 to £94,
>> the VAT on which would be £16.45 (which is also £16.45
>> less than the VAT on £188). But then the item will have been:
>> £110.45 + £16.45 VAT = £126.90 (overall), a VAT rate of
>> only 14.89% !!!
>>
>> However, you will have paid £126.90 overall, which
>> you could consider to be: £108.00 + £18.90 VAT =
>> £126.90. Then you'd need to reclaim £18.90 input VAT...
>
"Troy Steadman" wrote
> Oh dear.
>
> "the taxable value is reduced from £188 to £94" ??? #### #@&!!! :)
>
> Where did you study maths did you say?

Are you trying to suggest that £188 - £94 is not £94 ??
[I'll let you use a calculator if you don't believe me...]

I don't think you need to study maths at Cambridge to realise that it is!

On 23 Apr, 14:58, "Tim"  wrote:
> >> > "Vass" wrote:
> >> >> We buy from a wholesaler (WHS)
> >> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
> >> >> send copies of our purchase invoces from WHS to HP for a cashback.
> >> >> NOw, we have claimed the vat back on the WHS
> >> >> invoice, but there is no docs from HP for the cashback,
> >> >> HP claim we should account for our own tax liabilites
> >> >> So, do I invoice HP for the cashback, knowing
> >> >> full well HP will not process the invoice their end?
> >> >> Can I self bill (in this case credit)?
> >> >> I'm sure I'm in for the vat here, but Customs are clueless
> >> >> too at the mo, will coe back to me in a week!
> >> >> TIA
> >> >> --
> >> >> Vass
>
> >> "PeterSaxton" wrote
> >> > You have to reduce your input tax. You don't
> >> > have to issue an invoice or a credit note.
>
> >> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> > "Tim" wrote:
> >> If the item was originally (say) £188.00  £32.90 VAT = £220.90> >> and you receive (say) £94 cashback -- paying £126.90 overall
> >> -- then do you reduce the input tax by £16.45 or £14? In other
> >> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>
> >> The webpage referred to above says that "the cash back reduces
> >> the taxable value of your purchase", and I understand that the
> >> 'taxable value' is the 'net' amount, ie originally £188 in my example> >> above. Thus the taxable value is reduced from £188 to £94,
> >> the VAT on which would be £16.45 (which is also £16.45
> >> less than the VAT on £188). But then the item will have been:
> >> £110.45  £16.45 VAT = £126.90 (overall), a VAT rate of
> >> only 14.89% !!!
>
> >> However, you will have paid £126.90 overall, which
> >> you could consider to be: £108.00  £18.90 VAT =
> >> £126.90. Then you'd need to reclaim £18.90 input VAT...
>
> "Troy Steadman" wrote
>
> > Oh dear.
>
> > "the taxable value is reduced from £188 to £94" ??? #### #@&!!! :)
>
> > Where did you study maths did you say?
>
> Are you trying to suggest that £188 - £94 is not £94 ??
> [I'll let you use a calculator if you don't believe me...]
>
> I don't think you need to study maths at Cambridge to realise that it is!

 "£188 - £94 is not £94" if you put "the taxable value is reduced
from" in front of it.

Either you are VAT registered, so taxable value is always net and the
payment is always gross, or you are unregisterered and the VAT is
disregarded.

Cambridge eh? Where do you stand on the question of creating "black
holes"?

>> >> > "Vass" wrote:
>> >> >> We buy from a wholesaler (WHS)
>> >> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
>> >> >> send copies of our purchase invoces from WHS to HP for a cashback.
>> >> >> NOw, we have claimed the vat back on the WHS
>> >> >> invoice, but there is no docs from HP for the cashback,
>> >> >> HP claim we should account for our own tax liabilites
>> >> >> So, do I invoice HP for the cashback, knowing
>> >> >> full well HP will not process the invoice their end?
>> >> >> Can I self bill (in this case credit)?
>> >> >> I'm sure I'm in for the vat here, but Customs are clueless
>> >> >> too at the mo, will coe back to me in a week!
>> >> >> TIA
>> >> >> --
>> >> >> Vass
>>
>> >> "PeterSaxton" wrote
>> >> > You have to reduce your input tax. You don't
>> >> > have to issue an invoice or a credit note.
>>
>> >> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>>
>> > "Tim" wrote:
>> >> If the item was originally (say) £188.00 + £32.90 VAT = £220.90,
>> >> and you receive (say) £94 cashback -- paying £126.90 overall
>> >> -- then do you reduce the input tax by £16.45 or £14? In other
>> >> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>>
>> >> The webpage referred to above says that "the cash back reduces
>> >> the taxable value of your purchase", and I understand that the
>> >> 'taxable value' is the 'net' amount, ie originally £188 in my example
>> >> above. Thus the taxable value is reduced from £188 to £94,
>> >> the VAT on which would be £16.45 (which is also £16.45
>> >> less than the VAT on £188). But then the item will have been:
>> >> £110.45 + £16.45 VAT = £126.90 (overall), a VAT rate of
>> >> only 14.89% !!!
>>
>> >> However, you will have paid £126.90 overall, which
>> >> you could consider to be: £108.00 + £18.90 VAT =
>> >> £126.90. Then you'd need to reclaim £18.90 input VAT...
>>
>> "Troy Steadman" wrote
>> > Oh dear.
>> >
>> > "the taxable value is reduced from £188 to £94" ??? #### #@&!!! :)
>> >
>> > Where did you study maths did you say?
>>
>"Tim" wrote:
>> Are you trying to suggest that £188 - £94 is not £94 ??
>> [I'll let you use a calculator if you don't believe me...]
>>
>> I don't think you need to study maths at Cambridge to realise that it is!
>
"Troy Steadman" wrote
> "£188 - £94 is not £94" if you put "the
> taxable value is reduced from" in front of it.

Eh?  The taxable value is £188.
The HMRC page says to reduce this by the cashback, which is £94.
So the taxable value is reduced from £188.
If £188 is reduced *by* £94, then  it is reduced *to* £94.
Hence - "the taxable value is reduced from £188 to £94".

What do you think the answer is to "£188
reduced by £94", if you think it's not £94?

"Troy Steadman" wrote
> Either you are VAT registered, ...

If you weren't VAT registered, then you wouldn't be reclaiming input VAT.
So we can take it as read that we *are* considering a VAT-registered entity.

"Troy Steadman" wrote
> ... so taxable value is always net and the payment is always gross, ...

Exactly.  You need to reduce the (net) £188 taxable value,
but the HMRC page says that you reduce this (net) amount by
the cashback (which is a gross amount!).  See the anomaly?

"Troy Steadman" wrote
> ... or you are unregisterered and the VAT is disregarded.

But then you wouldn't be reclaiming any input VAT,
and so there'd be no problem calculating it!

"Troy Steadman" wrote
> Cambridge eh? Where do you stand on
> the question of creating "black holes"?

I refer you to my learned colleague at said Uni....

On 23 Apr, 20:29, "Tim"  wrote:
> >> >> > "Vass" wrote:
> >> >> >> We buy from a wholesaler (WHS)
> >> >> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
> >> >> >> send copies of our purchase invoces from WHS to HP for a cashback> >> >> >> NOw, we have claimed the vat back on the WHS
> >> >> >> invoice, but there is no docs from HP for the cashback,
> >> >> >> HP claim we should account for our own tax liabilites
> >> >> >> So, do I invoice HP for the cashback, knowing
> >> >> >> full well HP will not process the invoice their end?
> >> >> >> Can I self bill (in this case credit)?
> >> >> >> I'm sure I'm in for the vat here, but Customs are clueless
> >> >> >> too at the mo, will coe back to me in a week!
> >> >> >> TIA
> >> >> >> --
> >> >> >> Vass
>
> >> >> "PeterSaxton" wrote
> >> >> > You have to reduce your input tax. You don't
> >> >> > have to issue an invoice or a credit note.
>
> >> >> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> >> > "Tim" wrote:
> >> >> If the item was originally (say) £188.00  £32.90 VAT = £220.90,
> >> >> and you receive (say) £94 cashback -- paying £126.90 overall
> >> >> -- then do you reduce the input tax by £16.45 or £14? In other
> >> >> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>
> >> >> The webpage referred to above says that "the cash back reduces
> >> >> the taxable value of your purchase", and I understand that the
> >> >> 'taxable value' is the 'net' amount, ie originally £188 in my example
> >> >> above. Thus the taxable value is reduced from £188 to £94,
> >> >> the VAT on which would be £16.45 (which is also £16.45
> >> >> less than the VAT on £188). But then the item will have been:
> >> >> £110.45  £16.45 VAT = £126.90 (overall), a VAT rate of
> >> >> only 14.89% !!!
>
> >> >> However, you will have paid £126.90 overall, which
> >> >> you could consider to be: £108.00  £18.90 VAT =
> >> >> £126.90. Then you'd need to reclaim £18.90 input VAT...
>
> >> "Troy Steadman" wrote
> >> > Oh dear.
>
> >> > "the taxable value is reduced from £188 to £94" ??? #### #@&!!! :> >> > Where did you study maths did you say?
>
> >"Tim" wrote:
> >> Are you trying to suggest that £188 - £94 is not £94 ??
> >> [I'll let you use a calculator if you don't believe me...]
>
> >> I don't think you need to study maths at Cambridge to realise that it is!
>
> "Troy Steadman" wrote
>
> > "£188 - £94 is not £94" if you put "the
> > taxable value is reduced from" in front of it.
>
> Eh?  The taxable value is £188.
> The HMRC page says to reduce this by the cashback, which is £94.
> So the taxable value is reduced from £188.
> If £188 is reduced *by* £94, then  it is reduced *to* £94.
> Hence - "the taxable value is reduced from £188 to £94".

Maybe it is if there was no VAT on the cash back, and I refer you to
my first posting as to why there may be no VAT on the cash back. Then,
yes, the amount you disclaim is (as you so rightly say) 15%.

But if there was VAT on the cash back you dislaim VAT at 7/47ths.

"You must reduce your input tax in the proportion in which you claimed
it" as HMRC put it in their brochure - clear and easy to understand.

On 24 Apr, 07:52, Troy Steadman  wrote:
> On 23 Apr, 20:29, "Tim"  wrote:
>
>
>
>
>
> > >> >> > "Vass" wrote:
> > >> >> >> We buy from a wholesaler (WHS)
> > >> >> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
> > >> >> >> send copies of our purchase invoces from WHS to HP for a cashback.
> > >> >> >> NOw, we have claimed the vat back on the WHS
> > >> >> >> invoice, but there is no docs from HP for the cashback,
> > >> >> >> HP claim we should account for our own tax liabilites
> > >> >> >> So, do I invoice HP for the cashback, knowing
> > >> >> >> full well HP will not process the invoice their end?
> > >> >> >> Can I self bill (in this case credit)?
> > >> >> >> I'm sure I'm in for the vat here, but Customs are clueless
> > >> >> >> too at the mo, will coe back to me in a week!
> > >> >> >> TIA
> > >> >> >> --
> > >> >> >> Vass
>
> > >> >> "PeterSaxton" wrote
> > >> >> > You have to reduce your input tax. You don't
> > >> >> > have to issue an invoice or a credit note.
>
> > >> >> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> > >> > "Tim" wrote:
> > >> >> If the item was originally (say) £188.00  £32.90 VAT = £220.90,
> > >> >> and you receive (say) £94 cashback -- paying £126.90 overall
> > >> >> -- then do you reduce the input tax by £16.45 or £14? In other> > >> >> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>
> > >> >> The webpage referred to above says that "the cash back reduces
> > >> >> the taxable value of your purchase", and I understand that the
> > >> >> 'taxable value' is the 'net' amount, ie originally £188 in my example
> > >> >> above. Thus the taxable value is reduced from £188 to £94,
> > >> >> the VAT on which would be £16.45 (which is also £16.45
> > >> >> less than the VAT on £188). But then the item will have been:
> > >> >> £110.45  £16.45 VAT = £126.90 (overall), a VAT rate of
> > >> >> only 14.89% !!!
>
> > >> >> However, you will have paid £126.90 overall, which
> > >> >> you could consider to be: £108.00  £18.90 VAT =
> > >> >> £126.90. Then you'd need to reclaim £18.90 input VAT...
>
> > >> "Troy Steadman" wrote
> > >> > Oh dear.
>
> > >> > "the taxable value is reduced from £188 to £94" ??? #### #@&!!!> > >> > Where did you study maths did you say?
>
> > >"Tim" wrote:
> > >> Are you trying to suggest that £188 - £94 is not £94 ??
> > >> [I'll let you use a calculator if you don't believe me...]
>
> > >> I don't think you need to study maths at Cambridge to realise that it is!
>
> > "Troy Steadman" wrote
>
> > > "£188 - £94 is not £94" if you put "the
> > > taxable value is reduced from" in front of it.
>
> > Eh?  The taxable value is £188.
> > The HMRC page says to reduce this by the cashback, which is £94.
> > So the taxable value is reduced from £188.
> > If £188 is reduced *by* £94, then  it is reduced *to* £94.
> > Hence - "the taxable value is reduced from £188 to £94".
>
> Maybe it is if there was no VAT on the cash back, and I refer you to
> my first posting as to why there may be no VAT on the cash back. Then,
> yes, the amount you disclaim is (as you so rightly say) 15%.
>
> But if there was VAT on the cash back you dislaim VAT at 7/47ths.
>
> "You must reduce your input tax in the proportion in which you claimed
> it" as HMRC put it in their brochure - clear and easy to understand.- Hide quoted text -
>
> - Show quoted text -

On 24 Apr, 07:52, Troy Steadman  wrote:
> On 23 Apr, 20:29, "Tim"  wrote:
>
>
>
>
>
> > >> >> > "Vass" wrote:
> > >> >> >> We buy from a wholesaler (WHS)
> > >> >> >> HP (the supplier to the WHS) have a promotion runnng, whereby we
> > >> >> >> send copies of our purchase invoces from WHS to HP for a cashback.
> > >> >> >> NOw, we have claimed the vat back on the WHS
> > >> >> >> invoice, but there is no docs from HP for the cashback,
> > >> >> >> HP claim we should account for our own tax liabilites
> > >> >> >> So, do I invoice HP for the cashback, knowing
> > >> >> >> full well HP will not process the invoice their end?
> > >> >> >> Can I self bill (in this case credit)?
> > >> >> >> I'm sure I'm in for the vat here, but Customs are clueless
> > >> >> >> too at the mo, will coe back to me in a week!
> > >> >> >> TIA
> > >> >> >> --
> > >> >> >> Vass
>
> > >> >> "PeterSaxton" wrote
> > >> >> > You have to reduce your input tax. You don't
> > >> >> > have to issue an invoice or a credit note.
>
> > >> >> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> > >> > "Tim" wrote:
> > >> >> If the item was originally (say) £188.00  £32.90 VAT = £220.90,
> > >> >> and you receive (say) £94 cashback -- paying £126.90 overall
> > >> >> -- then do you reduce the input tax by £16.45 or £14? In other> > >> >> words, do you reclaim £16.45 input VAT or £18.90 input VAT?
>
> > >> >> The webpage referred to above says that "the cash back reduces
> > >> >> the taxable value of your purchase", and I understand that the
> > >> >> 'taxable value' is the 'net' amount, ie originally £188 in my example
> > >> >> above. Thus the taxable value is reduced from £188 to £94,
> > >> >> the VAT on which would be £16.45 (which is also £16.45
> > >> >> less than the VAT on £188). But then the item will have been:
> > >> >> £110.45  £16.45 VAT = £126.90 (overall), a VAT rate of
> > >> >> only 14.89% !!!
>
> > >> >> However, you will have paid £126.90 overall, which
> > >> >> you could consider to be: £108.00  £18.90 VAT =
> > >> >> £126.90. Then you'd need to reclaim £18.90 input VAT...
>
> > >> "Troy Steadman" wrote
> > >> > Oh dear.
>
> > >> > "the taxable value is reduced from £188 to £94" ??? #### #@&!!!> > >> > Where did you study maths did you say?
>
> > >"Tim" wrote:
> > >> Are you trying to suggest that £188 - £94 is not £94 ??
> > >> [I'll let you use a calculator if you don't believe me...]
>
> > >> I don't think you need to study maths at Cambridge to realise that it is!
>
> > "Troy Steadman" wrote
>
> > > "£188 - £94 is not £94" if you put "the
> > > taxable value is reduced from" in front of it.
>
> > Eh?  The taxable value is £188.
> > The HMRC page says to reduce this by the cashback, which is £94.
> > So the taxable value is reduced from £188.
> > If £188 is reduced *by* £94, then  it is reduced *to* £94.
> > Hence - "the taxable value is reduced from £188 to £94".
>
> Maybe it is if there was no VAT on the cash back, and I refer you to
> my first posting as to why there may be no VAT on the cash back. Then,
> yes, the amount you disclaim is (as you so rightly say) 15%.

Oh dear, now I'm getting it wrong. The amount you disclaim is whatever
you first claimed. Geddit?

"Troy Steadman" wrote
> Maybe it is if there was no VAT on the cash back, and I refer you to
> my first posting as to why there may be no VAT on the cash back.
> Then, yes, the amount you disclaim is (as you so rightly say) 15%.
>
>But if there was VAT on the cash back you dislaim VAT at 7/47ths.


Ermm - how do you determine whether there is VAT or not
on the cashback?  There is no invoice or credit note for it...


"Troy Steadman" wrote
>"You must reduce your input tax in the proportion in which you claimed
> it" as HMRC put it in their brochure - clear and easy to understand.

Can you give a reference for that?  I didn't
notice it on the webpage that Peter referred to.

Anyway, that's not clear at all.  If you are only at the stage
of reducing your input tax, then you have not yet claimed
it.  So how can you reduce it in the same proportion
as you claimed it, when you haven't claimed it yet?!

"Troy Steadman" wrote
> Oh dear, now I'm getting it wrong. The amount
> you disclaim is whatever you first claimed. Geddit?

Eh?  Are you saying that you can't reclaim *any* input tax, in other
words you reduce it to *nil*, if you've had just a partial cashback?

On 24 Apr, 08:55, "Tim"  wrote:
> "Troy Steadman" wrote
>
> > Maybe it is if there was no VAT on the cash back, and I refer you to
> > my first posting as to why there may be no VAT on the cash back.
> > Then, yes, the amount you disclaim is (as you so rightly say) 15%.
>
> >But if there was VAT on the cash back you dislaim VAT at 7/47ths.
>
> Ermm - how do you determine whether there is VAT or not
> on the cashback?  There is no invoice or credit note for it...

Because there is an invoice/credit note for it. The original invoice
details the cash back, and tell you whether Output VAT was added to it
or not, and at what rate - anything between 0% & 17.5% depending on
how you view the discount.

> "Troy Steadman" wrote
>
> >"You must reduce your input tax in the proportion in which you claimed
> > it" as HMRC put it in their brochure - clear and easy to understand.
>
> Can you give a reference for that?  I didn't
> notice it on the webpage that Peter referred to.

Tim, I am *quoting* from the reference Peter gave to you.

http://www.hmrc.gov.uk/briefs/brief0807.htm

paragraph 5.

> Anyway, that's not clear at all.  If you are only at the stage
> of reducing your input tax, then you have not yet claimed
> it.  So how can you reduce it in the same proportion
> as you claimed it, when you haven't claimed it yet?!

Who says you haven't claimed it? There is a timing difference here so
you may well have claimed it and need to reclaim it.

>> "Troy Steadman" wrote
>> > But if there was VAT on the cash back you dislaim VAT at 7/47ths.
>>
>"Tim" wrote:
>> Ermm - how do you determine whether there is VAT or not
>> on the cashback? There is no invoice or credit note for it...
>
"Troy Steadman" wrote
> Because there is an invoice/credit note for it.

Well, both the OP and Peter have stated that there *isn't*...

"Troy Steadman" wrote
> The original invoice details the cash back, ...

How could that be so?  The original invoice is from the
wholesaler to the purchaser;  but the cashback comes from
the manufacturer, not the wholesaler.  If the original invoice
detailed the cashback, then the purchaser wouldn't need to
claim it from the manufacturer afterwards -- s/he would
just pay the wholesaler the lower price to start with.

"Troy Steadman" wrote
> ... and tell you whether Output VAT was added to
> it or not, and at what rate - anything between 0%
> & 17.5% depending on how you view the discount.

It'll just tell you about the VAT on the initial price,
paid to the wholesaler.
Nothing about the cashback from the manufacturer.

>> "Troy Steadman" wrote
>> >"You must reduce your input tax in the proportion in which you claimed
>> > it" as HMRC put it in their brochure - clear and easy to understand.
>>
> "Tim" wrote:
>> Can you give a reference for that? I didn't
>> notice it on the webpage that Peter referred to.
>
"Troy Steadman" wrote
>Tim, I am *quoting* from the reference Peter gave to you.
>
> http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> paragraph 5.

Yep, OK, that paragraph says: "If you are VAT-registered and
you receive a 'cash back' that relates to a taxable supply, this
reduces the taxable value of your purchase, and you must reduce
your input tax in the proportion in which you claimed it." ...

So it says that the (£94) cashback reduces the (£188) taxable
value, that is a reduction of half.  It then says that you reduce
the input tax in the same proportion, which is again by half.
That leads to reclaiming £16.45 input tax (overall) instead of
the full £32.90 input tax (from initial invoice).  Do you agree?

On 24 Apr, 12:18, "Tim"  wrote:
> >> "Troy Steadman" wrote
> >> > But if there was VAT on the cash back you dislaim VAT at 7/47ths.
>
> >"Tim" wrote:
> >> Ermm - how do you determine whether there is VAT or not
> >> on the cashback? There is no invoice or credit note for it...
>
> "Troy Steadman" wrote
>
> > Because there is an invoice/credit note for it.
>
> Well, both the OP and Peter have stated that there *isn't*...
>
> "Troy Steadman" wrote
>
> > The original invoice details the cash back, ...
>
> How could that be so?  The original invoice is from the
> wholesaler to the purchaser;  but the cashback comes from
> the manufacturer, not the wholesaler.  If the original invoice
> detailed the cashback, then the purchaser wouldn't need to
> claim it from the manufacturer afterwards -- s/he would
> just pay the wholesaler the lower price to start with.
>
> "Troy Steadman" wrote
>
> > ... and tell you whether Output VAT was added to
> > it or not, and at what rate - anything between 0%
> > & 17.5% depending on how you view the discount.
>
> It'll just tell you about the VAT on the initial price,
> paid to the wholesaler.
> Nothing about the cashback from the manufacturer.

It tells you everything about the VAT on the cashback from the
manufacturer because that is included (or not included) in the
original price.

> >> "Troy Steadman" wrote
> >> >"You must reduce your input tax in the proportion in which you claimed> >> > it" as HMRC put it in their brochure - clear and easy to understand.
>
> > "Tim" wrote:
> >> Can you give a reference for that? I didn't
> >> notice it on the webpage that Peter referred to.
>
> "Troy Steadman" wrote
>
> >Tim, I am *quoting* from the reference Peter gave to you.
>
> >http://www.hmrc.gov.uk/briefs/brief0807.htm
>
> > paragraph 5.
>
> Yep, OK, that paragraph says: "If you are VAT-registered and
> you receive a 'cash back' that relates to a taxable supply, this
> reduces the taxable value of your purchase, and you must reduce
> your input tax in the proportion in which you claimed it." ...
>
> So it says that the (£94) cashback reduces the (£188) taxable
> value, that is a reduction of half.

It doesn't say that at all. It says it "reduces" it but it doesn't say
by what proportion.

> It then says that you reduce
> the input tax in the same proportion, which is again by half.
> That leads to reclaiming £16.45 input tax (overall) instead of
> the full £32.90 input tax (from initial invoice).  Do you agree?

I don't see why you think the £94 is a net figure - a cash amount is
normally Gross isn't it?

If you pay n% VAT on something, then you get a credit, that credit is
at n% isn't it?

Why wiould this be any different?

> "Tim" wrote:
>> Yep, OK, that paragraph says: "If you are VAT-registered and
>> you receive a 'cash back' that relates to a taxable supply, this
>> reduces the taxable value of your purchase, and you must reduce
>> your input tax in the proportion in which you claimed it." ...
>>
>> So it says that the (£94) cashback reduces the
>> (£188) taxable value, that is a reduction of half.
>
"Troy Steadman" wrote
> It doesn't say that at all. It says it "reduces"
> it but it doesn't say by what proportion.

You are correct that it doesn't say by what *proportion*, but
it *does* say "by the cashback".  If you reduce £188 (the
taxable value) *by* £94 (the cashback), then you get £94...


"Troy Steadman" wrote
> I don't see why you think the £94 is a net figure...

I don't!  Why do you think that I said earlier " ... the HMRC
page says that you reduce this (net) amount by the cashback
(which is a **gross** amount!).  See the anomaly? ... " ?

"Troy Steadman" wrote
> ... - a cash amount is normally Gross isn't it?

Yes, but we don't know what VAT rate (if any)
has been applied to get that gross amount.

"Troy Steadman" wrote
> If you pay n% VAT on something, then
> you get a credit, that credit is at n% isn't it?
>
> Why wiould this be any different?

Why should it be the same?
The cashback is not a credit against a debit that was made
in error -- it is a totally separate transaction, from a different
entity (the manufacturer this time, not the wholesaler).

Will you answer the question - in the example I gave earlier, what
amount of input tax do you think should be claimed, and why?

On 24 Apr, 19:46, "Tim"  wrote:
> > "Tim" wrote:
> >> Yep, OK, that paragraph says: "If you are VAT-registered and
> >> you receive a 'cash back' that relates to a taxable supply, this
> >> reduces the taxable value of your purchase, and you must reduce
> >> your input tax in the proportion in which you claimed it." ...
>
> >> So it says that the (£94) cashback reduces the
> >> (£188) taxable value, that is a reduction of half.
>
> "Troy Steadman" wrote
>
> > It doesn't say that at all. It says it "reduces"
> > it but it doesn't say by what proportion.
>
> You are correct that it doesn't say by what *proportion*, but
> it *does* say "by the cashback".  If you reduce £188 (the
> taxable value) *by* £94 (the cashback), then you get £94...
>
> "Troy Steadman" wrote
>
> > I don't see why you think the £94 is a net figure...
>
> I don't!  Why do you think that I said earlier " ... the HMRC
> page says that you reduce this (net) amount by the cashback
> (which is a **gross** amount!).  See the anomaly? ... " ?
>
> "Troy Steadman" wrote
>
> > ... - a cash amount is normally Gross isn't it?
>
> Yes, but we don't know what VAT rate (if any)
> has been applied to get that gross amount.
>
> "Troy Steadman" wrote
>
> > If you pay n% VAT on something, then
> > you get a credit, that credit is at n% isn't it?
>
> > Why wiould this be any different?
>
> Why should it be the same?
> The cashback is not a credit against a debit that was made
> in error -- it is a totally separate transaction, from a different
> entity (the manufacturer this time, not the wholesaler).

That is where you are going wrong. It is not "a totally separate
transaction", it is (for VAT purposes), part of the original
transaction: Once again that same paragraph 5:

"If you are VAT-registered and you receive a ‘cash back’ that relates
to a taxable supply, this reduces the taxable value of your purchase,
and you must reduce your input tax in the proportion in which you
claimed it".

> Will you answer the question - in the example I gave earlier, what
> amount of input tax do you think should be claimed, and why?

You can reclaim n / (100) of £94 where n is the original VAT % rate
on the whole of the purchase including the discount. We don't know
what n is so I can't answer your question.

> "Tim" wrote:
>> Will you answer the question - in the example I gave earlier, what
>> amount of input tax do you think should be claimed, and why?
>
"Troy Steadman" wrote
> You can reclaim n / (100+n) of £94 where n is the original
> VAT % rate on the whole of the purchase including the discount.
> We don't know what n is so I can't answer your question.

Yes we do - it was 17.5% (it was my example, remember!).
So you are saying that having paid £188+VAT = £220.90 initially,
and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
you then disclaim (not "reclaim"!) 17.5/117.5 of £94 = £14,
so you will have effectively claimed £18.90 input tax overall.

The taxable value will therefore have reduced from £188
to £108, a reduction of £80.  So the cashback of £94 did
*not* reduce the taxable value; only £80 of it did.  You
are therefore saying that the HMRC webpage is incorrect!

On 25 Apr, 19:52, "Tim"  wrote:
> > "Tim" wrote:
> >> Will you answer the question - in the example I gave earlier, what
> >> amount of input tax do you think should be claimed, and why?
>
> "Troy Steadman" wrote
>
> > You can reclaim n / (100) of £94 where n is the original
> > VAT % rate on the whole of the purchase including the discount.
> > We don't know what n is so I can't answer your question.
>
> Yes we do - it was 17.5% (it was my example, remember!).
> So you are saying that having paid £188各 = £220.90 initially,
> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
> you then disclaim (not "reclaim"!)

Flipping heck Tim! By choosing a 50% discount you have picked the very
spot where "disclaim" and "reclaim" meet. You reclaim the balance
after you have disclaimed the balance :0(

Give me a sensible discount and a sensible VAT percentage for a
sensible invoice that incorporates a cash discount and I'll give you
an answer..

Invoice me £100  VAT. At the same time offer me £10 manufacturer's
"cash back".

Troy Steadman wrote:

> On 25 Apr, 19:52, "Tim"  wrote:
>> > "Tim" wrote:
>> >> Will you answer the question - in the example I gave earlier, what
>> >> amount of input tax do you think should be claimed, and why?
>>
>> "Troy Steadman" wrote
>>
>> > You can reclaim n / (100+n) of £94 where n is the original
>> > VAT % rate on the whole of the purchase including the discount.
>> > We don't know what n is so I can't answer your question.
>>
>> Yes we do - it was 17.5% (it was my example, remember!).
>> So you are saying that having paid £188+VAT = £220.90 initially,
>> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
>> you then disclaim (not "reclaim"!)
> 
> Flipping heck Tim! By choosing a 50% discount you have picked the very
> spot where "disclaim" and "reclaim" meet. You reclaim the balance
> after you have disclaimed the balance :0(

No, disclaim and reclaim do not meet, because I believe Tim means
that in the normal course of events you will *already* have claimed
the whole input tax relating to the whole original purchase price.
Then, when at a later date you receive the cashback, you have to
un-do that part of the reclaim which relates to the after-the-fact
discount.

> Give me a sensible discount and a sensible VAT percentage for a
> sensible invoice that incorporates a cash discount and I'll give you
> an answer..
> 
> Invoice me £100 + VAT. At the same time offer me £10 manufacturer's
> "cash back".

Let's see.  Supplier invoices you for £117.50.  You would normally
reclaim £17.50 input tax.  But then the £10 cashback happens.  It
creates one or other of two fictions:

Either that you bought the stuff for (£100-£10)+VAT, and so you
must reduce your input VAT claim by £1.75.

Or alternatively that you bought the stuff for (£100-£8.51)+VAT
(i.e. for £100+VAT-£10), and so you must reduce your input VAT claim
by £1.49.

>> > "Tim" wrote:
>> >> Will you answer the question - in the example I gave earlier, what
>> >> amount of input tax do you think should be claimed, and why?
>> >
>> "Troy Steadman" wrote
>> > You can reclaim n / (100+n) of £94 where n is the original
>> > VAT % rate on the whole of the purchase including the discount.
>> > We don't know what n is so I can't answer your question.
>>
> "Tim" wrote:
>> Yes we do - it was 17.5% (it was my example, remember!).
>> So you are saying that having paid £188+VAT = £220.90 initially,
>> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
>> you then disclaim (not "reclaim"!)
>
"Troy Steadman" wrote
> Flipping heck Tim! By choosing a 50% discount you have
> picked the very spot where "disclaim" and "reclaim" meet. You
> reclaim the balance after you have disclaimed the balance :0(
>
> Give me a sensible discount and a sensible VAT percentage...

OK, if you really can't cope with the
numbers as given previously, how about:-

You pay £752+VAT(17.5%) = £883.60 for
something, and receive a cashback of £94.
After initially reclaiming £131.60 input VAT, how
much do you later disclaim -- £14 or £16.45 ?

"Troy Steadman" wrote
> ... for a sensible invoice that incorporates a cash discount...

Ermmm - it's a separate *cashback* that isn't
shown on the invoice, not a **cash discount**
which is incorporated on the invoice, remember!

"Troy Steadman" wrote
> ... and I'll give you an answer..

I look forward to it!

On 25 Apr, 23:09, Ronald Raygun <no.s...@localhost.localdomain> wrote:
> Troy Steadman wrote:
> > On 25 Apr, 19:52, "Tim"  wrote:
> >> > "Tim" wrote:
> >> >> Will you answer the question - in the example I gave earlier, what
> >> >> amount of input tax do you think should be claimed, and why?
>
> >> "Troy Steadman" wrote
>
> >> > You can reclaim n / (100) of £94 where n is the original
> >> > VAT % rate on the whole of the purchase including the discount.
> >> > We don't know what n is so I can't answer your question.
>
> >> Yes we do - it was 17.5% (it was my example, remember!).
> >> So you are saying that having paid £188各 = £220.90 initially,
> >> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,> >> you then disclaim (not "reclaim"!)
>
> > Flipping heck Tim! By choosing a 50% discount you have picked the very
> > spot where "disclaim" and "reclaim" meet. You reclaim the balance
> > after you have disclaimed the balance :0(
>
> No, disclaim and reclaim do not meet, because I believe Tim means
> that in the normal course of events you will *already* have claimed
> the whole input tax relating to the whole original purchase price.
> Then, when at a later date you receive the cashback, you have to
> un-do that part of the reclaim which relates to the after-the-fact
> discount.
>
> > Give me a sensible discount and a sensible VAT percentage for a
> > sensible invoice that incorporates a cash discount and I'll give you
> > an answer..
>
> > Invoice me £100  VAT. At the same time offer me £10 manufacturer's
> > "cash back".
>
> Let's see.  Supplier invoices you for £117.50.  You would normally
> reclaim £17.50 input tax.  But then the £10 cashback happens.  It
> creates one or other of two fictions:
>
> Either that you bought the stuff for (£100-£10)各, and so you
> must reduce your input VAT claim by £1.75.

If the original invoice was for £100 net and £15.75 VAT, then
(notwithstanding paragraph 5) you do not reduce your input VAT at all.

If (as in Tim's case) the original invoice was for £100 net and £17.50
VAT "you must reduce your input tax in the proportion in which you
claimed it" - 17.5 / 117.5 ie £14.9% of £10 = £1.49

> Or alternatively that you bought the stuff for (£100-£8.51)各
> (i.e. for £100各£10), and so you must reduce your input VAT claim
> by £1.49.

Whichever way you look at it you come back to the same answer :)

Troy Steadman wrote:

> On 25 Apr, 23:09, Ronald Raygun <no.s...@localhost.localdomain> wrote:
>> Troy Steadman wrote:
>> > On 25 Apr, 19:52, "Tim"  wrote:
>> >> > "Tim" wrote:
>> >> >> Will you answer the question - in the example I gave earlier, what
>> >> >> amount of input tax do you think should be claimed, and why?
>>
>> >> "Troy Steadman" wrote
>>
>> >> > You can reclaim n / (100+n) of £94 where n is the original
>> >> > VAT % rate on the whole of the purchase including the discount.
>> >> > We don't know what n is so I can't answer your question.
>>
>> >> Yes we do - it was 17.5% (it was my example, remember!).
>> >> So you are saying that having paid £188+VAT = £220.90 initially,
>> >> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
>> >> you then disclaim (not "reclaim"!)
>>
>> > Flipping heck Tim! By choosing a 50% discount you have picked the very
>> > spot where "disclaim" and "reclaim" meet. You reclaim the balance
>> > after you have disclaimed the balance :0(
>>
>> No, disclaim and reclaim do not meet, because I believe Tim means
>> that in the normal course of events you will *already* have claimed
>> the whole input tax relating to the whole original purchase price.
>> Then, when at a later date you receive the cashback, you have to
>> un-do that part of the reclaim which relates to the after-the-fact
>> discount.
>>
>> > Give me a sensible discount and a sensible VAT percentage for a
>> > sensible invoice that incorporates a cash discount and I'll give you
>> > an answer..
>>
>> > Invoice me £100 + VAT. At the same time offer me £10 manufacturer's
>> > "cash back".
>>
>> Let's see.  Supplier invoices you for £117.50.  You would normally
>> reclaim £17.50 input tax.  But then the £10 cashback happens.  It
>> creates one or other of two fictions:
>>
>> Either that you bought the stuff for (£100-£10)+VAT, and so you
>> must reduce your input VAT claim by £1.75.
> 
> If the original invoice was for £100 net and £15.75 VAT, then
> (notwithstanding paragraph 5) you do not reduce your input VAT at all.

Rubbish.  The cashback, though given later, relates to the original
purchase, and therefore the input tax (i.e. £15.75) should be reduced.
There is no need for the original invoice to make any mention of the
cashback.

You don't of course reduce the input tax of the original purchase,
in the sense of adjusting the data on the invoice, but you reduce
the input tax which you claim by way of your VAT return, presumably
by means of a separate adjustment applied after the purchase invoices
have first been dealt with in the usual way.  Bear in mind that the
the cashback may well not be earned in the same VAT quarter as that
in which the original purchase will have been processed.

> If (as in Tim's case) the original invoice was for £100 net and £17.50
> VAT "you must reduce your input tax in the proportion in which you
> claimed it" - 17.5 / 117.5 ie £14.9% of £10 = £1.49

No, the "proportion" referred to in the rule isn't 17.5/117.5, it is the
proportion which the cashback represents of the purchase price (it needing,
of course, to be clarified whether the cashback (here £10) is deemed to be
a reduction of the net (£100) or gross (£117.50) price.  It appears to me
from my cursory glance at the rules you referred to that the default
presumption is that the cashback relates to the net price.

>> Or alternatively that you bought the stuff for (£100-£8.51)+VAT
>> (i.e. for £100+VAT-£10), and so you must reduce your input VAT claim
>> by £1.49.
> 
> Whichever way you look at it you come back to the same answer :)

No.  If you look at it one way, you reduce the input tax (that is to say
the input tax of £17.50 which relates to the purchase) by £10/£100, i.e.
by 10% of £17.50, or by £1.75 from £17.50 to £15.75.  If you look at it
the other way, you reduce it by £10/£117.50, i.e. by 8.51% of £17.50, or
by £1.49 from £17.50 to £16.01.

On 26 Apr, 22:50, Ronald Raygun <no.s...@localhost.localdomain> wrote:
> Troy Steadman wrote:
> > On 25 Apr, 23:09, Ronald Raygun <no.s...@localhost.localdomain> wrote:
> >> Troy Steadman wrote:
> >> > On 25 Apr, 19:52, "Tim"  wrote:
> >> >> > "Tim" wrote:
> >> >> >> Will you answer the question - in the example I gave earlier, what
> >> >> >> amount of input tax do you think should be claimed, and why?
>
> >> >> "Troy Steadman" wrote
>
> >> >> > You can reclaim n / (100) of £94 where n is the original
> >> >> > VAT % rate on the whole of the purchase including the discount.
> >> >> > We don't know what n is so I can't answer your question.
>
> >> >> Yes we do - it was 17.5% (it was my example, remember!).
> >> >> So you are saying that having paid £188各 = £220.90 initially,
> >> >> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
> >> >> you then disclaim (not "reclaim"!)
>
> >> > Flipping heck Tim! By choosing a 50% discount you have picked the very
> >> > spot where "disclaim" and "reclaim" meet. You reclaim the balance
> >> > after you have disclaimed the balance :0(
>
> >> No, disclaim and reclaim do not meet, because I believe Tim means
> >> that in the normal course of events you will *already* have claimed
> >> the whole input tax relating to the whole original purchase price.
> >> Then, when at a later date you receive the cashback, you have to
> >> un-do that part of the reclaim which relates to the after-the-fact
> >> discount.
>
> >> > Give me a sensible discount and a sensible VAT percentage for a
> >> > sensible invoice that incorporates a cash discount and I'll give you
> >> > an answer..
>
> >> > Invoice me £100  VAT. At the same time offer me £10 manufacturer's
> >> > "cash back".
>
> >> Let's see.  Supplier invoices you for £117.50.  You would normally
> >> reclaim £17.50 input tax.  But then the £10 cashback happens.  It
> >> creates one or other of two fictions:
>
> >> Either that you bought the stuff for (£100-£10)各, and so you
> >> must reduce your input VAT claim by £1.75.
>
> > If the original invoice was for £100 net and £15.75 VAT, then
> > (notwithstanding paragraph 5) you do not reduce your input VAT at all.
>
> Rubbish.  The cashback, though given later, relates to the original
> purchase, and therefore the input tax (i.e. £15.75) should be reduced.
> There is no need for the original invoice to make any mention of the
> cashback.

The £15.75 (which would otherwise be £17.50) is only £15.75 because itincorporates the Cash Back as a "given", The VAT rate might be 16% or
16.5% or 17.00% and that is why the HMRC advice is so woolly.

The cash back can relate to the original invoice (as you are saying)
or be unrelated to it (as Tim is saying).

Either way common sense and paragraph five tell you (surely):

My words: "You can only claim back what you have previously claimed -
no more, no less"

HMRC: "You must reduce your input tax in the proportion in which you
claimed it".

On 27 Apr, 01:39, Troy Steadman  wrote:
> On 26 Apr, 22:50, Ronald Raygun <no.s...@localhost.localdomain> wrote:
>
>
>
>
>
> > Troy Steadman wrote:
> > > On 25 Apr, 23:09, Ronald Raygun <no.s...@localhost.localdomain> wrote:> > >> Troy Steadman wrote:
> > >> > On 25 Apr, 19:52, "Tim"  wrote:
> > >> >> > "Tim" wrote:
> > >> >> >> Will you answer the question - in the example I gave earlier, what
> > >> >> >> amount of input tax do you think should be claimed, and why?
>
> > >> >> "Troy Steadman" wrote
>
> > >> >> > You can reclaim n / (100) of £94 where n is the original
> > >> >> > VAT % rate on the whole of the purchase including the discount.
> > >> >> > We don't know what n is so I can't answer your question.
>
> > >> >> Yes we do - it was 17.5% (it was my example, remember!).
> > >> >> So you are saying that having paid £188各 = £220.90 initially,
> > >> >> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
> > >> >> you then disclaim (not "reclaim"!)
>
> > >> > Flipping heck Tim! By choosing a 50% discount you have picked the very
> > >> > spot where "disclaim" and "reclaim" meet. You reclaim the balance
> > >> > after you have disclaimed the balance :0(
>
> > >> No, disclaim and reclaim do not meet, because I believe Tim means
> > >> that in the normal course of events you will *already* have claimed
> > >> the whole input tax relating to the whole original purchase price.
> > >> Then, when at a later date you receive the cashback, you have to
> > >> un-do that part of the reclaim which relates to the after-the-fact
> > >> discount.
>
> > >> > Give me a sensible discount and a sensible VAT percentage for a
> > >> > sensible invoice that incorporates a cash discount and I'll give you
> > >> > an answer..
>
> > >> > Invoice me £100  VAT. At the same time offer me £10 manufacturer's
> > >> > "cash back".
>
> > >> Let's see.  Supplier invoices you for £117.50.  You would normally
> > >> reclaim £17.50 input tax.  But then the £10 cashback happens.  It
> > >> creates one or other of two fictions:
>
> > >> Either that you bought the stuff for (£100-£10)各, and so you
> > >> must reduce your input VAT claim by £1.75.
>
> > > If the original invoice was for £100 net and £15.75 VAT, then
> > > (notwithstanding paragraph 5) you do not reduce your input VAT at all.> > Rubbish.  The cashback, though given later, relates to the original
> > purchase, and therefore the input tax (i.e. £15.75) should be reduced.> > There is no need for the original invoice to make any mention of the
> > cashback.
>
> The £15.75 (which would otherwise be £17.50) is only £15.75 because it
> incorporates the Cash Back as a "given", The VAT rate might be 16% or
> 16.5% or 17.00% and that is why the HMRC advice is so woolly.
>
> The cash back can relate to the original invoice (as you are saying)
> or be unrelated to it (as Tim is saying).
>
> Either way common sense and paragraph five tell you (surely):
>
> My words: "You can only claim back what you have previously claimed -
> no more, no less"

Why do I post after midnight?

My new words: "You should *disclaim* back what you have previously
claimed - no more, no less"

HMRC: "You must reduce your input tax in the proportion in which you
claimed it"

>>> > "Tim" wrote:
>>> >> Will you answer the question - in the example I gave earlier, what
>>> >> amount of input tax do you think should be claimed, and why?
>>> >
>>> "Troy Steadman" wrote
>>> > You can reclaim n / (100+n) of £94 ...
>>> > We don't know what n is so I can't answer your question.
>>>
>> "Tim" wrote:
>>> Yes we do - it was 17.5% (it was my example, remember!)...
>>
> "Troy Steadman" wrote
>> ...
>> Give me a sensible discount and a sensible VAT percentage...
>
"Tim" wrote
> OK, if you really can't cope with the
> numbers as given previously, how about:-
>
> You pay £752+VAT(17.5%) = £883.60 for
> something, and receive a cashback of £94.
> After initially reclaiming £131.60 input VAT, how
> much do you later disclaim -- £14 or £16.45 ?
>
> "Troy Steadman" wrote
>> ... and I'll give you an answer..
>
"Tim" wrote
> I look forward to it!

Troy, I'm still waiting for your answer.  Well, ... £14 or £16.45? ...

If you choose £14, then you're saying the HMRC page is incorrect.
[Ie you paid £672.00 + £117.60 VAT = £789.60 for the item,
but the HMRC page says the cashback (£94) reduces the taxable
value (£752), and you only reduced it by £80 -- not £94.]

If you choose £16.45, then you're saying the effective
VAT rate should be 17.07317...% (rather than 17.500%).
[Ie you paid £674.45 + £115.15 VAT = £789.60 for the item.]

Which is it?

Troy Steadman wrote:

> On 27 Apr, 01:39, Troy Steadman  wrote:
>> On 26 Apr, 22:50, Ronald Raygun <no.s...@localhost.localdomain> wrote:
>> > 
>> > The cashback, though given later, relates to the original
>> > purchase, and therefore the input tax (i.e. £15.75) should be reduced.
>> > There is no need for the original invoice to make any mention of the
>> > cashback.
>>
>> The £15.75 (which would otherwise be £17.50) is only £15.75 because it
>> incorporates the Cash Back as a "given", The VAT rate might be 16% or
>> 16.5% or 17.00% and that is why the HMRC advice is so woolly.
>>
>> The cash back can relate to the original invoice (as you are saying)
>> or be unrelated to it (as Tim is saying).

This is wrong.  Tim is not saying it is unrelated.  If it were unrelated,
you would not reduce your input tax at all.

>> Either way common sense and paragraph five tell you (surely):
>>
>> My words: "You can only claim back what you have previously claimed -
>> no more, no less"
> 
> Why do I post after midnight?
> 
> My new words: "You should *disclaim* back what you have previously
> claimed - no more, no less"
> 
> HMRC: "You must reduce your input tax in the proportion in which you
> claimed it"

No, you disclaim back that *part of* what you have previously claimed,
in the proportion which the cashback bears to the purchase price.

So, irrespective of what the VAT rate is, and indeed it could be a
mix of VAT rates if the purchase involved a mix of items at different
rates, then if the original purchase was for:

£X net plus £Y VAT equals £Z gross

(where X+Y=Z, but where Y/X is not necessarily equal to any single
actual VAT rate), then you will already have reclaimed £Y.

Now if the cashback later given is:

£C (deemed net - case 1) or
£D (deemed gross - case 2),

then the amount you disclaim ("the amount by which you reduce your
input tax"), subsequent to already having reclaimed £Y input tax, is:

Case 1:  £(C/X)*Y
Case 2:  £(D/Z)*Y

Of course if the cashback is specified as a rate rather than an amount,
e.g. if the cashback is, say, 10%, there would be no need to say whether
it is deemed net or gross, as it would give the same answer.  In case 1,
C would be 10% of X.  In case 2, D would be 10% of Z.  In either case
you would disclaim 10% of £Y.

"Ronald Raygun" wrote
> ... if the original purchase was for:
>
> £X net plus £Y VAT equals £Z gross
>
> (where X+Y=Z, but where Y/X is not necessarily equal to any
> single actual VAT rate), then you will already have reclaimed £Y.
>
> Now if the cashback later given is:
>
> £C (deemed net - case 1) or
> £D (deemed gross - case 2),
>
> then the amount you disclaim ("the amount by which you reduce your
> input tax"), subsequent to already having reclaimed £Y input tax, is:
>
> Case 1:  £(C/X)*Y

OK, because here you have reduced the taxable value
of £X by £C, as required by the HMRC webpage.

"Ronald Raygun" wrote
> Case 2:  £(D/Z)*Y

I'm not sure that actually follows the HMRC requirements, from
the webpage that Peter posted...  If you disclaim that much
VAT, then the revised taxable value would be £X*(1-D/Z)...

So you've only reduced the taxable value by £D*(X/Z),
whereas the HMRC webpage suggests that you need to
reduce it by £D (the cashback) -- "If ... you receive a
'cash back' ..., this reduces the taxable value of your purchase...".

Tim wrote:

> "Ronald Raygun" wrote
>> ... if the original purchase was for:
>>
>> £X net plus £Y VAT equals £Z gross
>>
>> (where X+Y=Z, but where Y/X is not necessarily equal to any
>> single actual VAT rate), then you will already have reclaimed £Y.
>>
>> Now if the cashback later given is:
>>
>> £C (deemed net - case 1) or
>> £D (deemed gross - case 2),
>>
>> then the amount you disclaim ("the amount by which you reduce your
>> input tax"), subsequent to already having reclaimed £Y input tax, is:
>>
>> Case 1:  £(C/X)*Y
> 
> OK, because here you have reduced the taxable value
> of £X by £C, as required by the HMRC webpage.

You seem to be reading something into the webpage which it doesn't
actually say.  It does not require that at all.  Well, it does, but
only by implication, not directly.

> "Ronald Raygun" wrote
>> Case 2:  £(D/Z)*Y
> 
> I'm not sure that actually follows the HMRC requirements,

I think it does, because I think that is what they mean when they
say "you must reduce your input tax in the proportion in which you
claimed it".  It's not very well worded, but common sense tells us
that that is what they should be wanting it to mean.

> from
> the webpage that Peter posted...  If you disclaim that much
> VAT, then the revised taxable value would be £X*(1-D/Z)...

Indeed, but so what?

> So you've only reduced the taxable value by £D*(X/Z),
> whereas the HMRC webpage suggests that you need to
> reduce it by £D (the cashback) -- "If ... you receive a
> 'cash back' ..., this reduces the taxable value of your purchase...".

To my mind it doesn't suggest that at all.  The full wording of the
relevant paragraph is:

"If you are VAT-registered and you receive a 'cash back' that relates
to a taxable supply, this reduces the taxable value of your purchase,
and you must reduce your input tax in the proportion in which you
claimed it."

Where it says "this reduces the taxable value of your purchase", it
does *not* say (nor, in my view, imply) that it reduces the taxable
value *by the actual amount of the cashback*.  It simply says that
the taxable value is reduced.  The key here is finding the pronoun's
intended antecedent:  In the phrase "this reduces", the word "this"
must be understood to refer not to the cashback itself, but to the
fact that the purchaser receives it.  With that interpretation, the
sentence does not directly specify the amount by which the taxable
value is reduced, it only says that there *is* a reduction.

The implication of the taxable value being reduced (by some unstated
amount) is of course that the (purchaser's input) tax thereon is
reduced by Y/X (this being the effective (average, where applicable)
VAT rate which applies to the purchase in question) of that unstated
amount, and accordingly the gross value of the purchase is reduced
by 1+Y/X of that unstated amount.

Clearly if £D is the gross reduction, it follows that the unstated
amount must equal £D/(1+Y/X), and not £D (unless Y=0).

On 26 Apr, 22:50, Ronald Raygun <no.s...@localhost.localdomain> wrote:
> Troy Steadman wrote:
> > On 25 Apr, 23:09, Ronald Raygun <no.s...@localhost.localdomain> wrote:
> >> Troy Steadman wrote:
> >> > On 25 Apr, 19:52, "Tim"  wrote:
> >> >> > "Tim" wrote:
> >> >> >> Will you answer the question - in the example I gave earlier, what
> >> >> >> amount of input tax do you think should be claimed, and why?
>
> >> >> "Troy Steadman" wrote
>
> >> >> > You can reclaim n / (100) of £94 where n is the original
> >> >> > VAT % rate on the whole of the purchase including the discount.
> >> >> > We don't know what n is so I can't answer your question.
>
> >> >> Yes we do - it was 17.5% (it was my example, remember!).
> >> >> So you are saying that having paid £188各 = £220.90 initially,
> >> >> and reclaiming £32.90 VAT initially, then receiving a £94 cashback,
> >> >> you then disclaim (not "reclaim"!)
>
> >> > Flipping heck Tim! By choosing a 50% discount you have picked the very
> >> > spot where "disclaim" and "reclaim" meet. You reclaim the balance
> >> > after you have disclaimed the balance :0(
>
> >> No, disclaim and reclaim do not meet, because I believe Tim means
> >> that in the normal course of events you will *already* have claimed
> >> the whole input tax relating to the whole original purchase price.
> >> Then, when at a later date you receive the cashback, you have to
> >> un-do that part of the reclaim which relates to the after-the-fact
> >> discount.
>
> >> > Give me a sensible discount and a sensible VAT percentage for a
> >> > sensible invoice that incorporates a cash discount and I'll give you
> >> > an answer..
>
> >> > Invoice me £100  VAT. At the same time offer me £10 manufacturer's
> >> > "cash back".
>
> >> Let's see.  Supplier invoices you for £117.50.  You would normally
> >> reclaim £17.50 input tax.  But then the £10 cashback happens.  It
> >> creates one or other of two fictions:
>
> >> Either that you bought the stuff for (£100-£10)各, and so you
> >> must reduce your input VAT claim by £1.75.
>
> > If the original invoice was for £100 net and £15.75 VAT, then
> > (notwithstanding paragraph 5) you do not reduce your input VAT at all.
>
> Rubbish.  The cashback, though given later, relates to the original
> purchase, and therefore the input tax (i.e. £15.75) should be reduced.
> There is no need for the original invoice to make any mention of the
> cashback.

Maybe you are right, but I would argue that that was an out and out
Cash Discount on day one - the VAT proving it - and doesn't fall under
these rules.

Troy Steadman wrote:

> On 26 Apr, 22:50, Ronald Raygun <no.s...@localhost.localdomain> wrote:
>> 
>> The cashback, though given later, relates to the original
>> purchase, and therefore the input tax should be reduced.
>> There is no need for the original invoice to make any mention of the
>> cashback.
> 
> Maybe you are right, but I would argue that that was an out and out
> Cash Discount on day one - the VAT proving it - and doesn't fall under
> these rules.

On the contrary.  It is only as a result of these rules that the
situation becomes as if a cash discount had been given on day one.
But only as far as the customer is concerned.  And because the
retailer still has to account for the full output tax, it is
emphatically unlike a cash discount.

Example:  Manufacturer supplies item to retailer for £1000+VAT.
Retailer supplies it to customer for £1200+VAT.  Manufacturer
later offers customer a 10% cashback, calculated on the gross
value of his retail purchase, i.e. (this being a 17.5% rated
item) the gross purchase value is £1410 and so the cashback is
worth £141.

Retailer accounts for output tax of £210 on the £1200 sale and
reclaims input tax of £175 on the £1000 purchase, thus in effect
remitting £35 VAT in respect of the markup (or value added) of
£200.

Customer accounts for £210 input tax on the purchase, and later
applies a £21 reduction to his input tax claim, in respect of the
£141 he will receive from the manufacturer.  So the cashback is
*really* only worth £120 to him, which is fair enough, being 10%
of the net purchase value.

The manufacturer will probably reduce his output tax by £21 too.
But the retailer is totally unaffected and applies no reductions
to anything.