What is the definition of a payment

Does debt comparison constitutes the definition of a payment?What constitues a payment

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TaxTim TaxTim says:
18 June 2013 at 11:31

A payment to whom or in what context?

Waldo says:
18 June 2013 at 12:08

I have a client that pays indirect tax on the payment basis. He runs company A and owes money to company B. In return company B owes money to company A.
So my Client Company A took the taxable money they are owed by Company B and played it off against the taxable money company B owes them.
My client has a valid tax invoice.
Does this constitute a payment, because it would have not been practical for Company A to pay company B and Company B then take the money and pay I back into company A bank account.

If it is seen as a payment I will be able to argue the tax is claimable, because its not a financial service due to no debtors accounts being taken over

TaxTim TaxTim says:
18 June 2013 at 13:28

If services are rendered or goods supplied from one company to another, assuming both are VAT vendors, then regardless of how the payments are made (in this case it is just a netting off) there is still a supply of goods or services and a payment for that supply which triggers a VAT event so yes this amount should be claimable as a VAT input.

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