Encouraging sales before VAT hike
VAT is set to rise to 20 per cent on 4 January 2011 and many people will want to make purchases before then to take advantage of the current lower rate. However, as is often the case in the world of taxation, matters are not quite as simple as they might be.
HM Revenue and Customs have set out detailed rules regarding VAT on sales which span 4 January 2011. These rules govern;
– goods or services supplied before the deadline, but invoiced or paid for afterwards
– invoices or payments made before 4 January 2011 but supplied after that date, and
– continuous or single supplies of services provided either side of the deadline
There are conditions in place to avoid ‘artificial’ deals between suppliers and customers. These cover circumstances where the suppliers and customers are connected, payment terms are generous (over 6 months) or transactions are worth over £100,000.
If you would like specific advice related to transactions you are considering making then contact our specialist VAT team at your nearest Moore and Smalley office.