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HMRC internal manual

VAT Traders’ Records Manual

HM Revenue & Customs
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Other invoicing arrangements for particular businesses: cash and carry wholesalers: credits to customers

Wholesalers often give credit for returned goods and for returnable containers such as empty bottles. Traders often prefer, for security reasons, to do this at a point away from the checkouts. However, when a trader wishes to account for credits through the cash register, the item must be processed and marked as a credit. Where there are sale items as well as credits on the same invoice, the totals of goods and VAT may be shown net of the credits. The trader should ensure that the deduction is made within the correct VAT category.

When the credit is in respect of returned goods or empty containers, the item on the invoice must be coded in the same way as the original sale was. You may normally allow VAT credit to be made at the rate of VAT applying at the time of the credit unless the:

  • goods are identifiable as having been sold at a lower VAT rate, or
  • timing of the credit is such that it is unlikely that the goods were sold at the current  VAT rate.