If you supply services on a continuing basis, you can send ‘requests for payment’, rather than invoices. No VAT is payable on a request for payment until payment is received. This has cash flow advantages, but it does entail an increase in paperwork as, when the request for payment is settled, a VAT receipt must then be issued.
Finance Charges and Discounts.
If you add a charge for late payment or provide a discount for early payment, the charge made or the amount of the payment that relates to the settlement discount not taken is not subject to VAT. It may be worth rewriting your terms of trade to include a settlement discount or finance charge. |
