VAT Changes

As has been well publicised, the standard VAT rate changed back to 17.5% on 1st January 2010. Here are a few tips with regards to the changes.

- If you have sales which cross over the rate change, you can invoice at 15% for the portion occurring up to the end of December 2009 but must charge 17.5% for the portion after 1st January 2010. Might be worth issuing 2 invoices. You will need to show you have made a "fair" assessment of the VAT due for both periods.

- Most of the flat rate percentages changed on 1st January. We have uploaded the new table to our resources page. If your VAT quarter crosses 1st January 2010, you will need to prepare separate calculations at the difference flat rate percentages for the period to 31st December 2009 and after 1st January 2010. Alternatively, we will prepare the calculations for you for a fixed fee of £95 + VAT. Please call us on 01865 - 821100 for help.

- If you are on Cash Accounting for VAT, you still become liable for the VAT when the invoice is paid, but at the rate applicable when the invoice was issued. As such a December 2009 sales invoice paid in Feb '10 will attract 15% VAT, not 17.5%.

- Most businesses will need to be able to handle 2 different VAT rates throughout January 2010 and possibly beyond, due to the need to issue sales invoices at 17.5% while still receiving late purchase invoices at 15%. We have prepared guidance for Quickbooks users here and Sage users here on implementing the changes.