VATREC13070 - Credit and Debit notes: Regulation 38 - Increase/decrease in consideration

Regulation 38 of the VAT Regulations 1995 (SI 1995/2518) requires businesses to adjust their VAT account, where there has been a change in the value of the underlying consideration in relation on which VAT is due, and a corresponding change in the amount of VAT charged.

VATSC06630 explains where Regulation 38 will apply and what is meant by an increase or decrease in consideration.

In these circumstances, the legislation places a clear obligation on the parties to adjust their VAT account. Such changes will be evidenced by a credit note or a debit note.

VATREC13100 lists situations in which credit notes are issued as a matter of commercial practice, but which do not involve an increase or decrease in consideration.