Topic: VAT on Prompt Payment Discount

Had some work done on the house and the invoice offers a 2.5% discount if paid within 7 days. This figure is calculated from the pre-vat amount. But I am still expected to pay the full vat amount calculated as if there were no discount applied. This doesn't seem right to me.

Found some HMRC guidance for businesses which seems to suggest that the customer (me) has to recover the overpaid VAT through their VAT account. Well, I am not registered for VAT so that can't apply.

Any ideas?

Re: VAT on Prompt Payment Discount

You are going to pay VAT for the discounted price.

The supplier should issue a credit note to you for the discount and reduction in VAT or reissue the invoice.