Business News

Standard rate VAT

The standard rate of VAT was reduced from 17.5% to 15% for the 13 month period 1 December 2008 to 31 December 2009. HMRC have confirmed that the standard rate of VAT will revert to 17.5% from 1 January 2010.

The government have confirmed that legislation will be introduced to counter schemes which purport to apply the 15% VAT rate to goods or services to be supplied on or after the date that the rate returns to 17.5%. The measures will apply where the customer cannot recover all the VAT on the supply and:

  • the supplier and customer are connected parties or
  • the supplier funds the purchase of the goods or services or
  • a VAT invoice is issued by the supplier where payment is not due for at least six months.

A supplementary charge will also apply where a pre-payment in excess of £100,000 is made before the rate rise in respect of goods or services to be provided on or after the date of the rate rise.

The effect of the measures will be to charge supplementary VAT of 2.5%, where VAT of 15% has been declared.

Internet links: HMRC budget note 71, HMRC budget note 72

Back

Critical questions for your business
Are you paying too much tax?
Are you making enough profit from your business?
Would you like to be able to compare your business with others?
Are you looking for pro-active business support from your accountant?
Is your business where you want it to be?
Do you understand the numbers in your accounts?
Do you have a business plan?
Do you have a marketing plan?
Will your business meet your retirement needs?
Have you a succession, retirement or exit strategy?
If you want help with any of the above contact us at Lamont Pridmore for a FREE initial meeting.

 

 

Design by WebWatch UK