VAT Rate Changes

January 1st 2010 sees the VAT Rate increase to 17.5% again.

The UK Government announced earlier this year that the rate of Standard VAT in the UK will increase back to 17.5% (after it was temporarily reduced to 15.0% on 1st December 2008) on 1 January 2010.

Opera II

Opera II was amended in version 6.70.00 to use the Rate 2% field on the VAT Code when progressing SOP documents (Orders, Quotes etc) to Invoices; this should cater for the needs of the vast majority of users.

• For customers using version 6.70.00 or later, the Rate 2 fields on the VAT Processing Form needs to be updated with 17.5% effective from 1/1/2010.
• For customers with earlier versions than 6.70.00 of Opera II, the VAT Utility provided in November 2008 will need to be run if they have un-invoiced, SOP/Invoicing transactions with a VAT rate of 15.0%.

However, there could be exceptions  – see Special Rules.

Opera and Capital Gold

The VAT Utility that was provided in November 2008 for these products will potentially need to be run.

Special Rules

If the goods are provided before the increase in VAT e.g. 22/12/2009 and then billed after the VAT increase e.g. 02/01/2010, the user can opt to apply a 15.0% VAT charge to the Invoice. 

This is valid as the issue of stock was made whilst the VAT Rate was 15.0% and the Invoice was raised within 14 days of supply.

This however will not save the customer any money as a lesser amount can be reclaimed as Input Tax therefore HMRC are advising that this is an unlikely working practice.

For further details please see http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-guidance.pdf