Posts Tagged ‘VAT invoice’

VAT rate change 1st January 2010 - What it means for you

Friday, December 18th, 2009

On 1 January 2010, the standard rate of VAT reverts to 17.5 per cent after a period of 13 months at 15 per cent.

Goods that are supplied or taken away before the 1st January can still be charged at 15%, even if they are paid for after that date..

Some businesses will still be trading at midnight on 31 December 2009 and HMRC has acknowledged it would be unfair to expect them to stop what they are doing on a busy New Year’s Eve and change their systems to cope with an extra 2.5 per cent VAT.  They will be allowed to continue applying the 15 per cent rate until their trading session ends that night, or until 6am, whichever is the earlier. The types of business affected are: pubs, clubs, restaurants and similar retail shops and telecommunications providers.

Exempt and partly exempt businesses (especially Charities) should consider taking advantage of early deliveries of goods, because, by so doing, they will minimise irrecoverable input tax.

Business owners should be aware that where a supply of services spans the change, i.e. it starts before 1 January 2010 but does not finish until on or after that date, the supplier may choose split his invoice to show amounts due at the two rates. As that treatment is optional, recipients of such services, whose input tax is not fully recoverable, should encourage their suppliers to take up the option.

You  should remember that the VAT fraction for determining the VAT amount from a VAT-inclusive figure reverts to 7/47, from 3/23.

Changes to the flat rate scheme

The percentages were revised downwards on 1 December 2008 when the standard rate was reduced to 15 per cent. However, the changes from 1 January 2010 will not only reflect the reversion to the 17.5 per cent standard rate, but also take into account business patterns across the various sectors over the last year.

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Do you have a valid VAT invoice?

Saturday, October 3rd, 2009

In my last post about reclaiming VAT on expenses incurred by an employee, I talked about getting a supplier to make out an invoice directly to the company.  But what should be included on a VAT invoice, and what will happen if any of the items that should be included, aren’t?

Valid VAT invoices

For an invoice to be valid in the taxman’s eyes, all of the following  must be present on the invoice:

  1. The invoice must contain a unique identifying invoice numberautomated-invoice-processing2
  2. The date of supply of goods/ services should be displayed
  3. The date of the invoice (the tax point)
  4. The name and address of the purchaser
  5. The type of supply (e.g sale of goods, lease, rental, commission etc)
  6. A description of the goods or services supplied
  7. For each description, a quantity of goods or extent of services supplied
  8. The total amount payable excluding VAT
  9. The rate and amount of any discounts offered
  10. The rates of VAT applied
  11. The amount of tax chargeable at each VAT rate
  12. The total amount of VAT chargeable

If any of the above is missing from an invoice, it is not a valid invoice for tax purposes and there is no legal entitlement to reclaim VAT on it.  It has been known for input VAT claims to be refused because of minor ommissions.

VAT invoice Tip

I would recommend using the list above as a checklist for supplier invoices.  Make sure you carry out spot checks on invoices you receive to ensure they meet all the criteria for being valid and that you don’t miss out on potential VAT reclaims.

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