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Accountants in VAT Reminder
Bradford-based chartered accountants Watson Buckle has warned local businesses to start preparing now for the forthcoming rise in VAT, which comes into effect in less than two months’ time.
The standard rate of VAT is going up from 17.5 per cent to 20 per cent on 4 January 2011, just a year after the last change – when the rate returned to 17.5 per cent from the temporarily-reduced rate of 15 per cent.
For businesses which mostly make cash sales to non-VAT registered customers, the new rate should be applied for all takings received on or after 4 January, while businesses which generally invoice customers should also use the new rate after this date.
However, if the invoice is for goods or services delivered prior to that date, the lower rate may be used, although that would only be necessary for customers which cannot themselves reclaim the VAT, since they would otherwise just be able to claim the VAT back at the new rate.
From 4 January, new Flat Rate Scheme percentages will also apply – more information can be found on the HM Revenue and Customs website.
Any credit notes issued should be at the rate of VAT which was in force at the time of the original invoice, so credit notes issued after 4 January for sales made before that date should apply a VAT rate of 17.5 per cent.
Watson Buckle partner John Kinsella said: “With three changes in the VAT rate in three years, businesses have had to endure added cost and inconvenience which they could well do without.
“To make the transition as easy as possible, it is vital that businesses begin to plan for the changeover now and seek advice if they are unsure.”
For more information, contact Watson Buckle on 01274 516700 or visit www.watsonbuckle.co.uk
