changing from 15% to 17.5%

570416 Registered Posts: 1 New contributor 🐸
Hi any advice on how to treat payments in advance on services that will be paid in october 09 but not provided untill april 10.
I have contacted HMRC who have told me that the customer has to pay the amount at 17.5% but i have also sen the industry guideline who say the 15% rate is correct.


  • whiterose
    whiterose Registered Posts: 49 Regular contributor ⭐
  • truecockney
    truecockney Registered Posts: 94 Regular contributor ⭐
    I would agree with the HMRC on this one. The tax date is typically the date that service is provided and as you would be providing the service after January, you would raise any invoice or receipt at 17.5%.

    There does appear to be a grey area when providing a service prior to January 1, but billing afterwards. Nobody I spoke to about that had any idea what the rules were(except quoting the 14 days grace. Anything after that it was down to the provider whether to bill at 15% or 17.5%)!

    You can raise a "proforma" invoice stating 15%, but as this is a way of providing an "official quote", you will need to charge the correct VAT rate when you raise the VAT invoice.
  • Jenny Chamberlain
    Jenny Chamberlain Registered Posts: 10 New contributor 🐸
    Time of Supply and Tax Point Dates

    I recently had the same question at a HMRC roadshow and below is exactly what was handed out, this may help you to decide.

    You must account for VAT in the tax period in which the tax point occurs unless you use the cash accounting scheme.

    Basic Tax Points
    Goods - tax point is usually the date when you send them to your customer or the customer takes them away

    Services - the date when the service is performed. Normally taken as the date when all the work execpt invoicing is completed.

    These are overridden by:

    Actual Tax Points

    If you either issue a VAT invoice or receive a payment before the basic tax point, then the tax point is the date you issue the invoice or receive the payment whichever happens first.

    If you issue a VAT invoice up to 14 days after the basic tax point then the date when you issue the invoice becomes the tax point

    Any deposits or part payments will always create a tax point and VAT will be due.


    We will be issuing invoices on the 1st Jan for Jan - March and have been told face to face by HMRC that these correctly should be at the new rate and not 15% but if anybody pre pays in Dec then the tax point becomes the date we receive the payment and this will be at 15%!!!!

    Hope this helps
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