VAT – Price adjustments

The measure

The government will introduce stricter rules for how and when adjustments to VAT should be made following a reduction in price. Secondary legislation will tighten definitions in this area and will ensure a credit note is issued to customers.

This measure is intended to guarantee that businesses are transparent and do not benefit from VAT that is due to the consumer or the Exchequer.


Who will be affected?

The changes will be relevant to all VAT registered business.


When will the measure come into effect?

Draft legislation will be published in 2019 and a tax information and impact note (TIIN) for this measure will be published alongside the draft legislation.

The measure will come into force in September 2019.

Our view

We will need to wait to see the specifics of these changes but the objective of this measure would appear to be to ensure that taxpayers do not obtain a VAT benefit that should accrue to another party (e.g. a customer) and that VAT adjustments are only made in respect of genuine price reductions.


Daniel Lyons

Daniel Lyons


Head of Tax Policy & Indirect Tax Policy Lead