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HMRC have issued further guidance to
businesses on the reduction in the
standard rate of VAT from 1 December 2008.
The guidance clarifies certain issues
regarding the ‘tax point’ rules for the
date of supply.
In normal circumstances, where a
business invoices within 14 days after the
supply of goods and services, this is
generally the effective tax point for VAT,
replacing the basic date of supply rule.
This does not apply where payment is
received in advance, as this triggers the
tax point earlier. It does mean that goods
and services supplied between 18 and 30
November but invoiced from 1 December 2008
onwards should be charged at 15% where
provided within 14 days of the supply
date. Concern that businesses would not be
able to effect the necessary changes to
their accounting systems in time has
resulted in a prompt response by HMRC.
HMRC have agreed that the normal 14 day
limit can be extended to 30
days for goods or services
provided between 18 November 2008 and 30
November 2008 inclusive. Such supplies can
be invoiced at 15% at any time up to 30
days after the supply was made, provided
that the invoice is raised on or after 1
December 2008. This is to apply to all
businesses without the need to obtain
formal approval. This effectively allows
businesses additional time to amend their
accounting systems following the rate
change.
Where a business has previously agreed
an extension to the 14 day limit with HMRC,
it can continue to use that time limit but
where it is less than 30 days it can opt
to use the 30 day limit instead.
The link at the bottom of this article
will take you to the guidance on the
change in the standard rate of VAT.
However, please do get in touch if you
have any queries on the VAT changes.
Internet link:
HMRC VAT guidance |
