| The standard rate of
VAT was reduced from 17.5% to 15% for
the 13 month period 1 December 2008 to
31 December 2009. HMRC have confirmed
that the standard rate of VAT will
revert to 17.5% from 1 January 2010.
The government have confirmed that
legislation will be introduced to
counter schemes which purport to apply
the 15% VAT rate to goods or services
to be supplied on or after the date
that the rate returns to 17.5%. The
measures will apply where the customer
cannot recover all the VAT on the
supply and:
- the supplier and customer are
connected parties or
- the supplier funds the purchase
of the goods or services or
- a VAT invoice is issued by the
supplier where payment is not due
for at least six months.
A supplementary charge will also
apply where a pre-payment in excess of
£100,000 is made before the rate rise
in respect of goods or services to be
provided on or after the date of the
rate rise.
The effect of the measures will be
to charge supplementary VAT of 2.5%,
where VAT of 15% has been declared.
Internet links:
HMRC budget note 71
HMRC budget note 72 |
