Re: CashBack from Supplier VAT

"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...".


.