On 1 January 2010, the standard rate of VAT reverts to 17.5 per cent after…
VAT increases to 20% with effect from the 4th January. The normal tax point rules will apply, so if the invoice or payment is made before 4th January, VAT will be at 17.5%, on or after 4th January, it will be 20%.
- Retailers should start accounting for VAT from 4th January using the VAT fraction 1/6th (of the amount the customer pays). If the customer takes the goods away prior to the 4th, account for VAt at 17.5% (7/47ths)
- For all businesses that issue sales invoices, these should include VAT at 20% if raised on or after the 4th
- For supplies of services that span the change, you can charge 17.5% for those supplied before the 4th and 20% for those supplied afterwards. You can choose to charge all at 20%
- Suppliers issuiing invoices before the 4th, but delivering after it can choose to charge 20%
- Businesses issuing quotes for work to start after 4th Jan, must include VAT at 20%, unless payment is to be recieved before then
- Refunds and credit notes should be given at the same VAT rate that the orginal invoice was issued at.
- Sales of tickets for events taking place in 2011 can still be charged at 17.5% up to 4th January. This is because the point of payment is pre 4th January
- The VAT rate change will also impact on those using the flat rate scheme. The new flat rates can be found here
HMRC have issued full guidance notes, which can be accessed here. As always, if you have any questions on how these changes impact you, please give us a call