VAT adjustments on payments made by manufacturers to third parties

Posted on: 10/06/2013

On 31 May 2013 a consultation document on manufacturer’s refunds was published.  It deals with payments made by manufacturers to customers of retailers where the refund is paid direct (or via an intermediary) to the customer (who can be either a non-taxable person or a taxable person).  This was a topic covered during the recent VAT Forum conference in Madrid.  The UK is aiming to implement law changes in 2014 in order to allow a VAT adjustment for these types of payment.

The scope of the consultation is to

  1. discover the extent to which manufacturers make such payments
  2. consider how UK law needs to change to accommodate them
  3. in the case of a law change, to discover:
    a. what impact that may have and
    b. what administrative burdens it may give rise to.

We know that the question of VAT adjustments for such payments is not an open and shut case – for some the administrative burden and hassle involved in managing the VAT adjustments is just not worth the effort.  I also know that others are delighted by the potential change, but will have difficulty getting IT changes scheduled and implemented in such a short timetable.  And there is a good rump which strongly believes that a Government should not hold on to tax to which it is not entitled and will be delighted by the change.

The consultation ends on 31 August 2013.  I am never a fan of these Summer months consultations, fearing that it is an opportunity to slip something through that has not been considered properly!  Accordingly, I would encourage any businesses that might be affected to look at this and respond to the consultation.

If you would like a copy of the document, please email us at the usual address

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