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Prompt Payment Discounts in the UK

The handling of VAT on prompt payment discounts (PPD) in the UK changed from 1st April 2015, essentially making it the same as most other countries.

MoneyWorks 7 users do not need an update to do this. Instead simply change the PPD Settings in the Document Preferences of MoneyWorks (accessible under the Edit menu) from the old UK settings (the third option) to the first option, as shown below.

MoneyWorks Prompt Payment Discount settings for UK after April 2015

You will also need to make your PPD expense account taxable (i.e. give the it standard V tax code).

Note that you are also required to include text with the following meaning on the invoice.

A discount of x% of the full price applies if payment is made within n days. No credit note will be issued. Following payment you must ensure you have only recovered the VAT actually paid.

The easiest way to do this is to just have the text in the message area of the invoice. Alternatively you can customise the invoice to have the text “hard wired”.

Important: If you are paying/receipting an invoice that has a PPD that is dated before the 1st April, you will need to temporarily reset the preferences back to the old UK option (and the tax code on the PPD expense account) in order for the discount to be applied correctly and the correct VAT calculated.

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