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VAT changes for 2010

The start of 2010 is set to be a busy time for VAT registered businesses particularly those involved in cross border supplies of goods and services.

The current temporary VAT rate of 15% will revert back to 17.5% for supplies of goods and services made on or after 1 January 2010. As always, this is not necessarily as simply as it sounds, as there are special rules for supplies which span the date of the change and deposits/prepayments etc.

That said, there is a cash flow opportunity for businesses if they can encourage customers to pay in full before 1 January for goods and services to be provided after the increase. (However, please note that this is subject to anti-forestalling legislation which will affect certain transactions).

Changes will need to be made to computer-based accounting systems such as Sage and QuickBooks. We will put more information with regard to that on our website in due course. However if you need our help with this at the beginning of next year, please contact us now so that we can plan for it.

With effect from 1 January 2010, there will also be a number of important changes for businesses supplying goods to other EU countries and also for those supplying or receiving cross border services. These changes involve three aspects; the place and time of supply of certain services, and changes to the EC Sales Lists rules (currently only required for cross border supplies of goods but will be extended to include services). If you are involved in cross border transactions, now is the time to consider if and how the changes will affect your business and what needs to be done in order to comply.

Businesses which submit VAT refund claims for VAT incurred in other countries, will have to do so using a new EU electronic system being introduced on 1 January 2010. The new system has revised time limits and procedures for submission and repaymnet of the claims. In order to use the service, UK businesses will need to register online via the UK portal and this service is expected to be available from late November. HMRC will announce further details in due course. Whilst the UK is prepared for the new system, it is possible that certain EU countries may not be fully ready.

If you would like any advice about any VAT related matters, please do contact us.

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