The well known company Talktalk Ltd has lost its VAT appeal at the First-tier Tribunal (Talktalk Telecom Ltd v HMRC  UKFTT 12 (TC)).
The company succeeded on one issue:
“where goods or services are supplied on terms allowing a discount for prompt payment, consideration is deemed to be reduced by the amount of the discount, whether or not the customer obtains the discount as the result of paying promptly”
However, none of the supplies made by the company came within the necessary provision because:
“(1) In relation to services billed in advance, there were no terms “allowing a discount for prompt payment”. This was because the contract was only varied (so that the customer paid a lower amount for a particular month) if the customer accepted the SPD offer for that particular month by making the payment within 24 hours. The variation of the terms happened simultaneously with the payment, and there was no term allowing for a discounted payment to be made on a future date.
(2) In relation to services billed in arrears, the SPD was an offer by TalkTalk to accept a lower sum with an earlier payment date to discharge a pre-existing contractual obligation, and was thus a post-supply rebate of the consideration already due. Again, Para 4(1) did not apply.”