VAT - Quidco Cash-back

VAT - Quidco Cash-back

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If a VAT registered business buys a computer through Quidco and receives cashback at a later date, should there be an adjustment to the amount that is being claimed as input VAT? I have read HMRC Notice 700/7 para 9 re cash-backs, however this seems to specifically refer to cash-back payments made by a manufacturer. From Quidco's terms and conditions it seems that the cashback is generated from referral fees which are passed on to the end customer, so maybe they don't fall within para 9? Can anyone help clarify the VAT implications as a result of the cash-back payment? Many thanks. 

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By charlb
21st Jul 2014 12:52

Just hoping to start some discussion on this. Would anyone consider that the cash-back payment represents an inducement? Would such an inducement be outside the scope of VAT?

Please any ideas, thoughts etc welcome!

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chips_at_mattersey
By Les Howard
21st Jul 2014 20:59

cash-back

A cash-back is effectively a retrospective discount, which would result in an input tax adjustment. (Sight of the Ts & Cs would help to confirm this.)

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Replying to Matrix:
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By charlb
22nd Jul 2014 09:19

Thanks Les

These are the terms and conditions on the Quidco website in relation to the cashback (para 4) here : - http://www.quidco.com/quidco-account-holder-agreement/

I agree with what you are saying with regards to the fact that it would appear to be, on the face, of it a discount. However the invoice for the product is with the manufacturer eg Asus, and this shows the full price. The cashback has been received from Quidco, not from the manufacturer hence if we adjust the VAT input as if it were a discount there is no corresponding adjustment to VAT output made by the manufacturer as they are not offering the cash-back, which makes me wonder whether the VAT treatment is that of a discount?

 

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