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1. Do you have a written business plan?2. Do you produce monthly management accounts?                  3. Are they available within 10 days of the month end?

If you answer "NO" to any of the following questions, you need to contact The Finance Function on 0845 330 4031

 
 

 
 
 
 
January 2010

VAT Rate increase from 15% to 17.5% from 1 January 2010

The standard rate of VAT was temporarily reduced to 15 per cent on 1 December 2008 and it will return to 17.5 per cent on 1 January 2010.

For any sales of standard-rated goods or services that you make on or after 1 January 2010 you must charge VAT at the rate of 17.5 per cent. If you have a cash business and calculate your VAT using the VAT fraction you must revert to the VAT fraction of seven fortysevenths from 1 January 2010.

The change only applies to the standard VAT rate. There are no changes to sales that are zero-rated or reduced-rated for VAT. Similarly, there are no changes to the VAT exemptions. Any sales you make at these rates are unaffected by this change.

How to account for the VAT rate change

The way that you should account for the change in the VAT standard rate depends upon the type of business you have.

Retailers

If you are a retailer you must use the 17.5 per cent rate for all takings that you receive on or after 1 January 2010. But if your customer pays after 1 January for something they took away (or you delivered) before 1 January 2010, your sale took place before 1 January 2010 and you should use the 15 per cent rate.

Businesses that issue VAT invoices

You must use the 17.5 per cent rate for all VAT invoices that you issue on or after 1 January 2010. But see our section below on special rules for sales that span the change in rate.

Sales that span the change in rate

There are special rules for sales which span the change of rate. If you provide goods or services before 1 January 2010 and raise a VAT invoice after that date you can choose to account for VAT at 15 per cent. You donít need to tell HMRC if you do this.

Services you start before 1 January 2010 but finish afterwards

If you start work on a job before 1 January 2010 but finish afterwards you may account for the work done up to 31 December 2009 at 15 per cent and the remainder at 17.5 per cent. If you choose to do this you will have to be able to demonstrate that the apportionment is fair.

Continuous supplies of services

If you provide a continuous supply of services, such as leasing of photocopiers, you should account for the VAT due whenever you issue a VAT invoice or receive payment, whichever is the earlier. You must charge 17.5 per cent on invoices you issue and payments you receive on or after 1 January 2010. You may, if you wish, charge 15 per cent on the services youíve provided in the period up to 31 December 2009 and 17.5 per cent on the remainder. If you choose to do this you will have to be able to demonstrate that the apportionment is fair.

For further information please contact us on 0845 330 4031

 


 

 
 
 

Copyright 2010, The Finance Function Ltd. All rights reserved. Last Updated 12 January 2010