VAT Back to 17.5%

As you probably know, the standard rate of VAT was reduced from 17.5% to 15% last year.

VAT is due to return to its former level on 1 January 2010 and, as a VAT registered business, you must apply the 17.5% rate to all supplies of standard-rated goods and services made on or after that date.

What you should apply the new rate to:

All takings received on or after 1 January 2010
All VAT invoices you issue to other VAT registered businesses on or after 1 January 2010

There are a few exceptions to the rule:

You should account for 15% on all takings received on or after 1 January 2010, where they relate to goods customers took away with them or that you delivered before 1 January 2010
You should also account for 15% on VAT invoices where you provided goods or services before 1 January 2010 but don't invoice customers until after that date

There are also special rules that can be applied to services beginning before 1 January 2010, but completed after that date.

For all other special cases, such as cash and annual accounting schemes, please check on the HMRC website for more information (details of the new Flat Rate Scheme rates will also be published on the HMRC website)

Please note that if you make rate change errors in your first VAT Return after the change, HMRC will take into account any difficulties you found in adjusting to the change.

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