News
VAT Change Implications for SunSystems and iPOS
27th Nov, 2008
The Chancellor has announced that the rate of UK VAT is to decrease to 15% with effect from 1 December 2008. On 1 January 2010, the rate will revert back to 17.5%. This briefing outlines what we consider to be the main issues that will affect SunSystems and iPOS.
The Chancellor has announced that the rate of UK VAT is to decrease to 15% with effect from 1 December 2008. On 1 January 2010, the rate will revert back to 17.5%.
This briefing outlines what we consider to be the main issues that will affect the majority of businesses.
However, there are many more complications that may have an impact in various circumstances, so all businesses should take specific advice if there is any doubt about the impact of the rate change.
Apart from considering logistical issues, the VAT points to bear in mind are:
- If you wish to reduce prices to take account of the rate change, then multiply your current selling price by 46/47 in order to arrive at the new price
- Any payments received in respect of standard rated goods on or after 1 December 2008 should attract the new 15% rate. The VAT fraction is 3/23
- Deposits received before 1 December 2008 should attract the 17.5% rate
- If you have account customers, and goods were taken away or delivered before 1 December 2008, then 17.5% will apply (regardless of when payment is received)
- If you are selling goods, the date of provision is the date the goods are delivered or collected; if you are providing services they are provided on the date they are completed.
The normal rules are:
- For supplies provided before 17 November 2008, then the 17.5% rate will apply regardless of when you invoice or receive payment
- For supplies provided after 16 November 2008, the 15% VAT rate will apply if the supply is both invoiced and paid on or after 1 December 2008 and the invoice is within 14 days of provision–otherwise 17.5%
- For supplies provided on or after 1 December 2008, the 15% VAT rate applies as long as the invoice is issued and payment is made on or after 1 December 2008
Special rules
- Where services are provided on terms that means the payment is determined or payable from time to time (e.g. construction contracts and solicitors’ work are often on this basis), where both invoice and payment is on or after 1 December 2008, the VAT rate will be 15%, irrespective of when the work was completed
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If either payment is made or the invoice is issued before 1 December 2008, the rate will be 17.5%.
Invoice traders, who have invoiced or been paid before 1 December 2008 but where the goods or services will not be provided until after November 2008, can opt to apply the 15% rate. This is likely to be the case where rent or a deposit has been November 2008
Coping with the VAT rate change
While businesses need to take action quickly, it is vital that the implications of some key issues are understood so that mistakes and unexpected costs are avoided. We recognise that there is a short window of opportunity to effect a large number of changes in both SunSystems and iPOS, but please feel free to contact the support desk on +44 (0)1923 470 070.