Tax Update (November 2009)
VAT change in standard rate – special arrangements
On 1 January 2010 the standard rate of VAT changes from 15% to
17.5%. The Government are introducing special rules for certain
businesses that will be open for trade beyond midnight 2009. These
will be generally pubs, clubs, restaurants and hotels that will
have extended opening hours or hosting New Year's Eve
celebrations.
These businesses will be able to account for VAT at 15% on
takings received up to the earlier of:
- The end of trading of the 31 December session or
- 6am on the morning of 1 January 2010.
The ability to use this treatment is subject to the following
conditions:
Neither will it relate to sales made through coin operated or
similar machines (vending, amusements or gaming machines etc). In
these cases businesses must follow the normal rate change rules and
account for VAT based on the date of use or by apportionment where
no date of use is available.
It will not apply to transactions made after midnight on 31
December that would have been caught by the rate change
anti-forestalling legislation had they been made before
midnight.
However, HM Revenue & Customs appreciate that this may be
technically difficult for some businesses and will take a 'light
touch' where errors are made in the first VAT return after the
change. They will look at returns and where there is no loss of
revenue, will not actively seek adjustments.