 BUSINESS 4NETWORKING [Advice for all website owners - VAT Changes] |
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Posted on 24th Nov 2008 at 14:09
If the VAT rate is changed then you need to test your website if it has ecommerce, as some things may well have been hard coded (i.e. needs a web developer to change the rate). At the appropraite time we will be doing background checks to prove all is ok with our sites but it is always worth checking this for yourselves.
Things to look out for;
- Invoices that state "VAT @ 17.5%" - can often be hard coded for the wording
- Delivery VAT could be hard coded for calculations
- Product VAT may need to change for every item so your web developers may be able to help by running an update script for you (25 items easy to change by hand, 1,000,000 items not so easy) **
- Reports may have hard coded VAT rates
- Statements on the page that say Excludes VAT @ 17.5%
Of course you may not have ecommerce but are there any places on your web site that have prices and are they correct.
** You may want to keep your product price at £9.99 inclusive of VAT but that just means your product price will effectively increase so is it wise if others reduce theirs?
*** VAT will be 15% from Monday 1/12/2008 ***
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Posted on 24th Nov 2008 at 14:25
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Posted on 24th Nov 2008 at 14:47
Let's keep watching them Liam - I expect more companies will be caught out by this rather than the Year 200 bug....
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Posted on 24th Nov 2008 at 15:31
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Posted on 24th Nov 2008 at 15:36
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Posted on 24th Nov 2008 at 16:16
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I assume that the new VAT charge will be from the start of the new month - is this correct?
Next Monday the 1/12/2008...
I'm going to watch the fireworks....
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Posted on 24th Nov 2008 at 16:38
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Of course, if you came to us to build your online store you'd be able to change the rate yourself quicker than you could read this thread!
On my site it will be quicker than that, just one field to change, hurrah for 4Sight
Simon
 - your local department store
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Posted on 24th Nov 2008 at 19:06
Great post Paul.
On a related topic, if you use accounting software be aware if you change the rate of the Standard (default) VAT code it might retrospectively apply that to past invoices.
That's only what I've heard and this may not the case for all software so don't take the above as gospel.
I use Quickbooks and my accountant has told me to leave the "S" VAT category in place @ 17.5% but to create a new code called "T" for Temporary @ 15%. Then to make "T" the default code for new invoices from 1/12.
Any accountants or book keepers care to comment further?
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Posted on 24th Nov 2008 at 21:22
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Great post Paul.
On a related topic, if you use accounting software be aware if you change the rate of the Standard (default) VAT code it might retrospectively apply that to past invoices.
That's only what I've heard and this may not the case for all software so don't take the above as gospel.
I use Quickbooks and my accountant has told me to leave the "S" VAT category in place @ 17.5% but to create a new code called "T" for Temporary @ 15%. Then to make "T" the default code for new invoices from 1/12.
Any accountants or book keepers care to comment further?
I've been a Sage reseller since 1992, so it's the only software I can confidently comment on.
With Sage, at least, this is not, generally, an issue, as the VAT rate is applied at the point of posting, and any changes of this nature will not have a retrospective impact. You can happily change the T1 tax rate to 15%, and it will only apply it to transactions posted from that point onwards.
The only possible issue is those on the Cash Accounting scheme. Potentially, we could have a November invoice, with 17.5% VAT, paid in December, when the 15% rate applies. Sage, generally, applies the VAT rate of the invoice, rather than the payment, so it will cope with this situation without a problem.
 
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Posted on 24th Nov 2008 at 22:17
Except if you read the HMCE guidelines, should a service from November not be charged at 17.5% even if billed in December?
Graham Smith Business Services
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Posted on 24th Nov 2008 at 22:30
Is this drop a good move or bad move?
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Posted on 24th Nov 2008 at 22:34
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Posted on 25th Nov 2008 at 12:07
I don't think that the 2.5% drop is going to change my spending habits. The difference is so small that it's only the larger objects that I would be buying anyway that I can see a real benefit from.
Peninsula EvolvIT is an IT support and development provider.
Solutions to software problems with VAT change to 15%
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Posted on 25th Nov 2008 at 13:21
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Except if you read the HMCE guidelines, should a service from November not be charged at 17.5% even if billed in December?
This is where it can get a bit complicated to be honest...
If you invoice within 14 days of performing a service (or delivering or making available goods for that matter) the date of the invoice becomes the tax point for VAT. So for example for a service provided on 18 November or later, if you invoice on 1 December this becomes the tax point and you can apply the 15% rate, even though the services were provided in November. However, if you invoice in December for services provided more than 14 days before the invoice date then the date of performance becomes the tax point. So if this falls before 1 December then 17.5% VAT is due. This also assumes no payment was received before issuing the invoice, otherwise this becomes the tax point and that you haven't agreed an extension to the 14 days with HMRC.
Also, if you took a prepayment or pre invoiced before 1 December for a service to be provided (or goods to be delivered) after 1 December, you can elect to use the performance/delivery date as the tax point and apply the 15% rate.
I'm now going to shoot off to London for a nice relaxing evening at the Emirates not thinking about VAT!
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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