From 4th January 2011 the standard rate of VAT is increasing from 17.5% to 20%. Those who currently use the flat rate scheme will also be affected...
From 4th January 2011 the standard rate of VAT is increasing from 17.5% to 20%. Those who currently use the flat rate scheme will also be affected.
In most cases the rate applicable will increase by 1%, however, a full list can be found on HMRC’s website.
Care should be taken to ensure that the correct VAT rate is applied; common queries are answered below:-
Retailers - any sales made on or after the 4th January must charge VAT at 20%. However, if a customer takes away (or you deliver) an item before 4th January but does not pay until after this date; you should use the rate of 17.5%.
Services that span the rate change –work started prior to but completed after 4th January must be apportioned on a fair basis to account for the VAT at the correct rate.
Deposits – if you receive a deposit prior to 4th January for goods or services provided after that date, you will normally be entitled to apply the rate of 17.5%, however there are exceptions to this.
If you have any queries about the VAT rate change and how it will affect you please do not hesitate to contact us and we will endeavour to resolve your query.