 BUSINESS 4NETWORKING [Proposed VAT Reduction. Is It All Good?] |
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Posted on 24th Nov 2008 at 13:30
One of the key announcements expected this afternoon is the reduction in the VAT rate, from 17.5% to 15%, but is this good news for everyone?
Not necessarily, if you're on the Flat Rate Scheme.
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Posted on 24th Nov 2008 at 13:36
My understanding is that the flat rate schemes are based on an algorithm that makes a number of assumptions about inputs & outputs. Common sense, says that the algorithms will change and so will the flat rates.
Given the number of businesses operating flat rates, I would be stunned if they overlooked this!
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Posted on 24th Nov 2008 at 13:43
Plus, surely, this isnt primarily aimed at small businesses? It will make not one penny difference to me, as I reclaim all my input VAT and charge out almost entirely to VAT registered customers who then do the same.
So for me, neutral.
Unless it helps the economy. In which case, indirectly good news. Will it? Who knows, it will depend on the totality of the measures.
Paul Norman 4N North Tyneside and Oxford
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Posted on 24th Nov 2008 at 13:48
i guess this reduction in VAT is targeted at consumers, however as food and childrens clothes are already 0% VAT, I guess there wont be much benefit, just an opportunity to hike taxes later on when we come out of recession.
NEIL SLINN
Business Development Director
Bartercard Central Counties
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Posted on 24th Nov 2008 at 13:49
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Posted on 24th Nov 2008 at 13:51
Quote:
Plus, surely, this isnt primarily aimed at small businesses? It will make not one penny difference to me, as I reclaim all my input VAT and charge out almost entirely to VAT registered customers who then do the same.
So for me, neutral.
Unless it helps the economy. In which case, indirectly good news. Will it? Who knows, it will depend on the totality of the measures.
Whether aimed at small businesses or not, it is them that will suffer. The Flat Rate Scheme only applies to smaller businesses. If you are not on the Flat Rate Scheme, it wont affect you at all.
Also, as you say Steve, you would expect them to have thought of the changing of the Flat Scheme rates, as it seems pretty obvious when you say it, but, when we spoke to the Treasury this morning, no one had even anticipated the problem, so it will be interesting to see what he does.
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Posted on 24th Nov 2008 at 13:57
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I am on the flat scheme and was wandering if it would affect me as without any changes it means I could potentially lose money should the flat rate not be reduced (I think)
Hi James,
Yes, it would, potentially affect you. The more this matter is highlighted, the more likely they are to adjust it early on.
As Steve says, so many people are on the Flat Rate Scheme, that there will be massive pressure for them to change the flat rates, even if it has been overlooked for now.
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Posted on 24th Nov 2008 at 14:08
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Posted on 24th Nov 2008 at 14:13
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I think they have to change early as they could have a very negative backlash. It might improve the economy on one level but as it stands will cost me money!
Exactly. We only have to look at the 10% PAYE banding for a precedent.
That was scrapped, with little regard for the consequences. Cue the massive public backlash, and they had to change the tax codings in September, in order to compensate.
Let's hope it's not another one of those.
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Posted on 24th Nov 2008 at 16:51
The PBR press release does state that they have amended the Flat Rate Scheme percentages to reflect the reduction in the VAT rate.
Mark Chesham
DIRECTOR OF VAT SERVICES
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E mark.chesham@btg-tax.com
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Posted on 24th Nov 2008 at 17:09
I think the change in VAT is a weak reaction to the problem. I am not sure it is going to drive us all onto the high street, bouyant with new found confidence! It is going to cost some businesses money completing re-pricing etc. The thing that I found most shocking is the duty on petrol .... VAT is reduced by 2.5% for 13 months BUT according to the BBC report "duties on alcohol, tobacco and petrol will rise so the price remains at their current level"
Surely 2.5% reduction in petrol would be beneficial to individuals, but do you think, in 13 months time they will be reducing the duty on petrol by 2.5% or is it another stealth tax increase???
 Karen
www.cpdev.co.uk
More than just websites
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Posted on 24th Nov 2008 at 17:09
Details of the new flat rate percentages - and general guide to the changes can be found here - the document VAT Guidance PBR 08
http://www.hmrc.gov.uk/pbr2008/measure1.htm
Mark Chesham
DIRECTOR OF VAT SERVICES
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Harbourside House
4 – 5 The Grove
Bristol BS1 4QZ
T +44 (0)117 937 7130
F +44 (0)117 937 7131
DDL +44 (0)117 937 7138
M +44 (0)771 554 7355
E mark.chesham@btg-tax.com
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Posted on 24th Nov 2008 at 17:23
That petrol increase thing has really majorly pee'd me off!!
Karen
www.cpdev.co.uk
More than just websites
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Posted on 24th Nov 2008 at 17:38
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Posted on 24th Nov 2008 at 17:43
It feels like 'attack the small business day'
Karen
www.cpdev.co.uk
More than just websites
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