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For information of users:
This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.
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VAT
Very important VAT changes for 2010
There are some very big VAT changes on the horizon.
You will need to be fully aware about these, in order to assess what they mean for your business and what action to take.
1. VAT rate increase
You are probably aware that the standard rate of VAT was reduced from 17.5% to 15% last year.
On 1st January 2010, the rate will revert back to 17.5%. However, it is still possible to apply the 15% rate to invoices raised after 31st December 2009 for goods delivered, or services provided, before the change. Further details can be found at here >>.
2. Online filing of VAT returns
Do you know that from 1st April 2010, all businesses with annual (VAT exclusive) turnover of £100,000 or more will have to file their VAT returns online and pay their VAT electronically? You will need to register for VAT online prior to April 2010 in readiness. Further details can be found here >>.
All newly registered business from 1st April 2010 will also have to file electronically, irrespective of their level of turnover.
3. Services to or from overseas businesses
If you sell services to, or buy services from, overseas businesses, there are some major changes to consider from 1st January 2010. These affect where and how VAT is accounted for.
If you are providing services to overseas businesses, you currently need to charge UK VAT, unless the type of service falls within an excepted category. From 1st January 2010, you may no longer be required to charge VAT, because more services are to be treated as taking place outside the UK for VAT purposes.
If you are receiving certain services from overseas businesses, you are currently responsible for accounting for the VAT under the ‘reverse charge’ mechanism. From 1st January 2010, the number of services that have to be accounted for in this way is set to increase. This is because more services are to be treated as taking place where the customer belongs.
Further details can be found here >>.
4. EC Sales List
From 1st January 2010, there is a new requirement to submit EC Sales Lists for supplies of services that are subject to VAT in another EU country under the ‘reverse charge’ mechanism. Currently, this is only required for the sale of goods.
Further details can be found here >>.
5. Reclaiming VAT incurred in other EU states
From 1st January 2010, refund claims for VAT incurred in other EU countries will be made online in the UK, replacing the current paper-based system. This will avoid having to make claims directly to the country concerned using the relevant foreign language. The new system will therefore make the claim process easier.
Further details can be found here >>.
6. Flat rate scheme
If you use this scheme, the flat rate percentages will increase on 1st January 2010. Further details can be found here >>.
7. Sage Accounts Software
If you use Sage, please see here >> for instructions on how to amend the VAT rate.
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