VAT After 1st Jan 2010 Question

A-Vic

I have a feeling i know this already but-

say a client recevies a billed invoice and agrees to pay in installments till may2010 and there is vat on it, will the vat remain the same 15% as it was charged before 01.01.2010 or will the payments have to reflect the change in VAT after jan??

slackda

When is the service or product being delivered/Supplied?
Before Jan, then 15%.

jilt

If the tax point is in 2009 and therefore included on the VAT return in one lump then i'ts 15% VAT regardless of how the creditor has agrred to receive payment, but if its a bill showing £x due per month over a period of time, with a tax point each month, and included on the VAT return individaully then the VAT will change from January. EG Rental on our franking machine at work, they send one invoice per year with different tax points on.

Does that make sense?

Monsoon

The VAT follows the tax point. If the service/goods were provided in Dec 2009, the VAT is 15% on standard rated. Jan 1st 2010 or after, 17.5%. When they pay is irrelevant.

Unless they are on Cash Accounting... in which case I don't know for sure as I haven't had a cash accounting client in a long time. But I would *guess* that each payment follows the rate in force at the time.

Poodle

Hi


Legislation has been introduced to prevent avoidance (forestalling) where arrangements are made to account for VAT at 15% in advance of 1 January 2010 in respect of goods or services to be provided afterwards. The legislation will only apply to certain transactions and is unlikely to affect you unless:

You receive prepayments from persons connected to you for future supplies; or you issue advance VAT invoices to persons connected to you for future supplies; or you provide or arrange funding for your customers to enable them to pay in advance for goods or services to be supplied by you; or you issue VAT invoices that do not have to be paid for at least six months; or you receive pre-payments or issue advance VAT invoices in excess of £100,000, and this is not normal commercial practice; or you supply rights or options to receive goods and services from you free of charge or at a discount.

If the tax point is prior to 31st Jan and the invoice is paid within 6 months then the VAT will remain at 15%

http://www.hmrc.gov.uk/budget2009/bn72.pdf

A-Vic

This quite a small invoice but i have a feeling this is going to come up a lot over the next couple of months thanks everyone as i though it will be 15%

Great link thanks poodle will save that one