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VAT to rise from 4 January – are you ready?

As almost everyone will be aware, the standard rate of VAT is to rise from 17.5% to 20% at midnight on Monday 3 January 2011. This is the third change of rate in a little over two years and, although businesses will be getting used to dealing with the change, we thought it might be useful to set out some of the things you will need to consider.

Accounting software
The VAT default rate on your “sage” or other accounting software will need to be amended to apply the correct rate of VAT from 4 January. Please don’t hesitate to contact Tracey Kennett on 01946 692423 who will be able to help.

Supplies of goods that span the 4 January
The critical factor here is the “tax point”. Generally, a tax point is created when the goods are delivered, when an invoice is issued or when payment is made. So goods delivered in January, but invoiced or paid for in December, would still qualify for the 17.5% rate. Similarly, goods delivered, or paid for, in December, may still qualify for the 17.5% rate even if the invoice isn’t raised until January.

Supplies of services spanning the 4 January
Where services are started before 4 January but completed afterwards your invoice may be split and the 17.5% rate charged on work done before the date of the change.

Flat rate scheme
New flat rate scheme percentages come into effect from 4 January 2011 and two different rates will apply in any VAT return period spanning the 4 January 2011. You can find the new rates on our website, www.robinsonco.co.uk or, alternatively, please feel free to speak to Abigail Wilson on 01900 603623 who will be happy to help.

A note of caution!
There are “anti forestalling” rules to avoid people paying the wrong rate of VAT and the foregoing is a very brief outline of just some of the issues surrounding the change. If you are unsure or require further information please contact our VAT partner, Roger Troughton on 01900 603623 or by e-mail at rogertroughton@robinsonco.co.uk, or your usual contact in the firm.

Flat Rate Scheme percentage rates from 4 January 2011

These rates will apply from 4 January 2011 until further notice. 

Category of business

Appropriate percentage

Accountancy or book-keeping

14.5

Advertising

11

Agricultural services

11

Any other activity not listed elsewhere

12

Architect, civil and structural engineer or surveyor

14.5

Boarding or care of animals

12

Business services that are not listed elsewhere

12

Catering services including restaurants and takeaways

12.5

Computer and IT consultancy or data processing

14.5

Computer repair services

10.5

Dealing in waste or scrap

10.5

Entertainment or journalism

12.5

Estate agency or property management services

12

Farming or agriculture that is not listed elsewhere

6.5

Film, radio, television or video production

13

Financial services

13.5

Forestry or fishing

10.5

General building or construction services*

9.5

Hairdressing or other beauty treatment services

13

Hiring or renting goods

9.5

Hotel or accommodation

10.5

Investigation or security

12

Labour-only building or construction services*

14.5

Laundry or dry-cleaning services

12

Lawyer or legal services

14.5

Library, archive, museum or other cultural activity

9.5

Management consultancy

14

Manufacturing fabricated metal products

10.5

Manufacturing food

9

Manufacturing that is not listed elsewhere

9.5

Manufacturing yarn, textiles or clothing

9

Membership organisation

8

Mining or quarrying

10

Packaging

9

Photography

11

Post offices

5

Printing

8.5

Publishing

11

Pubs

6.5

Real estate activity not listed elsewhere

14

Repairing personal or household goods

10

Repairing vehicles

8.5

Retailing food, confectionary, tobacco, newspapers or children’s clothing

4

Retailing pharmaceuticals, medical goods, cosmetics or toiletries

8

Retailing that is not listed elsewhere

7.5

Retailing vehicles or fuel

6.5

Secretarial services

13

Social work

11

Sport or recreation

8.5

Transport or storage, including couriers, freight, removals and taxis

10

Travel agency

10.5

Veterinary medicine

11

Wholesaling agricultural products

8

Wholesaling food

7.5

Wholesaling that is not listed elsewhere

8.5

*'Labour-only building or construction services' means building or construction services where the value of materials supplied is less than 10 per cent of relevant turnover from such services; any other building or construction services are 'general building or construction services'

 

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