In Redcats (Brands) v HMRC [2015] UKFTT 376 (7 August 2015) the FTT found that a reduction in the price of goods did not give rise to a refund of VAT.
Empire Stores (a mail order and internet retailer) sold goods through agents who earned commissions on sales. These were treated for VAT purposes as retrospective reductions in the consideration for the supply of goods. When the goods were sold VAT was accounted for on the full selling price; and when the commissions were paid Empire retrospectively reduced the consideration for the supply and adjusted its VAT account accordingly.
Redcats had sold part of the Empire business to Littlewoods which was committed to pay any outstanding commissions up to a reserve amount deducted from the purchase price. Littlewoods had paid more than the reserve amount thereby triggering a ‘rather uncommercial situation’ as there was...
