VAT ADVICE AND PLANNING FOR THE YEAR 2010
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by: apexassociates
Do I simply raise January invoices at 17.5%?
The short answer to this question is almost invariably “yes”. But if you have a lot of invoicing from
early December to catch up on, then supplies made before 17 December will be subject to the old rate of
VAT. This is because for most types of supplies the “basic tax point” is the date on which the supply was
actually made, and if an invoice is raised more than 14 days after the basic taxpoint then the taxpoint
reverts to the original date of supply rather than taking the invoice date. So if you are up to date with
your invoicing by the time you take your Christmas break, then no problem at all.
Where you make continuous supplies, or issue an annual invoice for an ongoing service you will need to
check out the more detailed guidance to ensure that you charge the correct rate of VAT.
I am a cash accounter. Do I have to charge extra VAT when customers pay me in January for December
supplies?
No, the taxpoint determines the rate of VAT to charge. This taxpoint does not alter when you use cash
accounting, but you actually only pay over the VAT when you have had the money. If you are using purchased
accounting software, you will find that it copes adequately with the change in rate, as the rate of VAT
applying to the transaction is recorded when you process the invoice. When you post the payment, the
correct amount of VAT will be identified. If you calculate your own VAT, you will need to be careful with
your returns in the first half of 2010, to make sure that you identify the amount of VAT that showed on
the original invoice.
What about the flat rate scheme?
Flat rate scheme percentages change on 1 January 2010 too, so you will need to use the new rate on the
list issued on 9 December to account for supplies made on or after that date. Don’t just revert back to
the same percentage you were using before the rate went down last year as there have been some changes.
Where you calculate your flat rate VAT using the money you have received in a VAT period you will need to
separate out the cash coming in for December and earlier supplies from that for January and subsequent
supplies, so that you can apply the two different VAT flat rates to them – otherwise you will end up
paying too much VAT.
What about recovering VAT?
The VAT you recover is shown on the VAT invoice you have received, which is your authority to recover the
VAT, so this should be easy. Even less detailed tax invoices must show the rate of VAT charged, so you
will revert to the 7/47 VAT fraction instead of the 3/23 you have been using during 2009. Don’t be tempted
to recover 17.5% if you think the invoice has been wrongly raised at 15% - you should take this up with
your supplier, who will issue another invoice if necessary.
About the Author
At Apex Associates as a Tax consultants or accounting services, we take a different approach to the norm when it comes to providing high quality and highly relevant services to our clients. We do not simply focus on your accounts, but prefer to offer a proactive service to assist you by using our knowledge, experience and systems to identify how to improve your tax bills, growth rate, profitability, cash flow, take-home and the value of your business.
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