Chartered Management Accountants and Consultancy Services for Small and Medium Sized Businesses

PreBudget 2009

On the 9th December 2009 , the Chancellor, Alistair Darling announced that from 1st January 2010, the standard rate of VAT would return to 17.5%.

Whether you are registered for VAT or not, we recommend that you read the following summary carefully.

For those clients using Sage the transition should be reasonably smooth.

Sales Invoices

The procedure to change the rate is as follows:-

Open Sage.
Ensure that all the options ( Customer/Supplier/Bank etc.) are closed down.

On the menu line at the top of the screen click on Settings.

Go to Configuration

Go to the tab Tax codes.

Highlight the tax code T1

Click on the Edit button

In the rate box change from 15.00 to 17.50

Click on OK

Click on Apply

Close the Configurator menu.
(If the system displays on option to ‘save’ click “No”.)

All sales invoices will with tax codes T1 will now be changed.

Carefully check the first Sales invoice produced after making the changes.

Please remember to make the change only on the 1st January 2010.

If you use older versions of Sage, or Sage Instant, the screens may appear slightly different, but the basic procedures will be the same.

For those clients with Financial Controller, who use the Duplicate invoice or Recurring Invoice facility, please check that the VAT amounts have changed.

If you produce manual invoices, please remember to add on VAT @17.5%, from 1st January 2010.

The 14 day rule

If you provide goods and services that you deliver before the 1st January 2010, but you do not invoice within 14 days of the date of supply, you must still charge VAT at 15%.

Supplier invoices

Purchase invoice from your suppliers will still be charged at 15.0% if dated before 1/1/2010.
All invoices dated on or after this date should be charged at 17.5%, unless the supply was made before the 1/1/2010, but the invoice was not issued until after 14 days from the date of supply ( the 14 day rule), in which case the rate of VAT should be 15%.

The changes do not affect zero or reduce rated goods or exempt supplies

Check your supplier invoices carefully.

The VAT fraction

For VAT inclusive calculations, the VAT fraction will change from 3/23 to 7/47.

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For a no obligation discussion about how we can help your business,
contact Kenneth or Amanda Aldred here.