44 finance


Are you ready for the VAT changes?


From April 1, 2015 VAT law in connection with prompt payment discounts changed, writes Andy Dawbarn, VAT partner Wilkins Kennedy


Up until April 2015 the VAT legislation was relatively simple relating to prompt payment discounts with the amount of VAT declared on the invoice as well as the amount of VAT the recipient of the supply can treat as input tax being calculated on the discounted price. The amount of VAT did not change even if the prompt payment discount is not taken up by the customer.


The new rules are more complicated and could lead to errors unless procedures are in place to ensure the correct amount is recorded.


There are now two routes which the supplier can take if a prompt payment discount is offered and taken up. The supplier invoice must show the VAT calculated on the full price irrespective of whether a prompt payment discount is offered or not. If a prompt payment discount is offered then the rate of the discount must be shown on the invoice.


No further steps need be taken if the prompt payment discount is not taken up. However if it is, the supplier’s two options are:


deals extra


Dealmaking record for international M&A adviser BCMS


International merger and acquisitions adviser BCMS has experienced its most successful quarter of dealmaking in the company’s 25-year history, with year- on-year company sales at the end of Q1 2015 up significantly compared with the first quarter of 2014.


The adviser also broke its previous record


for the most companies sold in a single month, completing 14 company sales in March 2015.


This record-breaking first quarter follows a very positive 12 months for BCMS dealmakers, including a surge in international acquirers, with the firm nominated as a finalist in this year’s seventh Annual International M&A Awards, and the Thames Valley Deals Awards 2015.


In 2014, BCMS ranked as the world’s number one sell-side adviser to privately-owned companies by deals completed, according to data supplied to Bureau van Dijk’s Zephyr database. The company is also listed as the number one adviser under the same criteria for Q1 2015. In February, BCMS was also ranked highly


Penningtons Manches advises on sale of


global datacomms provider The sale will significantly strengthen the combined entity’s capabilities to service their customers in the primary energy markets around the world including Russia, Central Asia, South East Asia, the Middle East and Africa.


UK-based Hermes Datacommunications International, a global provider of managed network services for the upstream oil and gas industry, has been sold to global satellite communications service provider SpeedCast International.


A multi-disciplinary Penningtons Manches team, led by corporate partner Will Axtell, advised the shareholders of Hermes Datacomms on the complex cross-border sale which involved corporate, tax, real estate and employment lawyers from the firm’s Oxford and London offices.


www.businessmag.co.uk


Hermes Datacomms has over 20 years’ experience of providing managed services to the upstream oil and gas industry in 54 countries, representing 92% of the world’s oil and gas reserves and has an extensive portfolio of blue-chip energy customers. The company specialises in providing a broad range of communications services including


within the Thomson Reuters January/February 2015 Insight EMEA Mid Market Report.


Additionally, BCMS has managed significant international interest on behalf of its clients globally. Cross-border transactions now comprise 44% of the adviser’s completed company sales in 2015.


Jonathan Dunn, managing director of BCMS’ major transactions team, said: “These results prove that what BCMS does it does exceptionally well. BCMS prides itself on excellent deal execution and that starts with extensive research, which identifies the best possible acquirers in international markets.”


satellite communications, fibre connectivity and radio services for the oil and gas industry, to some of the most remote and challenging locations in the world, both onshore and offshore.


Giles Middleton, CEO of Hermes Datacomms, said: “The sale of our company was hugely important to us. We were delighted to be supported by Penningtons Manches throughout the process. Will Axtell and his team offered guidance and support on the key legal issues as well as high-quality, practical advice on getting the deal done. They worked tenaciously and creatively to find the best solutions to help ensure the deal reached a successful outcome.”


Details: www.penningtons.co.uk/people/a-e/will-axtell/


THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2015 1 Issuing a credit note.


If the prompt payment discount is taken up the supplier will issue a credit note to include the VAT amount. This is treated just like any other credit note and be processed through the VAT account for both the supplier and customer with adjustments made in the usual way.


2 No further action.


If, as a supplier, you decide not to issue a credit note, the following additional information will need to be included on the original invoice:-


The terms of the prompt payment discount which must include the time by which the discounted price must be paid; and a statement that the customer can only recover as input tax the VAT paid to the supplier HMRC suggests that it might be useful to also include:


• the discounted price; • the VAT on the discounted price; and


• the total amount due if the prompt payment discount is taken up.


HMRC also suggests that the following wording is used on the invoice:


“A discount of X% of the full price applies if payment is made within Y days of the invoice date. No credit note will be issued. Following payment you must ensure you have only recovered the VAT actually paid.”


If the discount is taken up the supplier, as they will have recorded output VAT based on the full price, will need to adjust the output tax amount.


If, as a customer, you receive an invoice with a prompt payment discount on it stating that no credit note will be issued then you will need to decide how to process the input VAT. The treatment will depend on whether you take up the discount. The most important point to remember is if the discounted price is paid then any VAT initially claimed as input tax, based on the full amount, would need to be adjusted to reflect the lower amount of VAT on the discounted price.


Details: 01784-435561 www.wilkinskennedy.com


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