VAT Rate
Changes – 1 January 2010
On 22nd April, the
Chancellor confirmed his previously announced changes to the VAT rate on Goods
and Services.
The standard rate of VAT is to change
from 15% to 17.5% from 1st January 2010.
In order that your systems charge VAT
at the correct rate it is imperative that the correct rates and dates are setup
in the File Maintenance VAT Table.
The following pages detail the changes
that should be made to your system.
These are :
Changes
required prior to 1st January 2010
Changes
required on the first working day on/after 1st January 2010
It
is imperative that these changes are made to ALL live databases on your system.
Prior to
1 January 2010
Prior to 1st January 2010,
you should set up the VAT Rates history table.
This holds the VAT rate applicable from specific start dates.
The current 15% rate commenced on 1st
December 2008. This should be entered
into your VAT rates table along with the future 17.5% rate commencing on 1st
January 2010.
The following should be done BEFORE 1st
January 2010.
Go into Suite File Maintenance, choose
VAT Codes from the Menu below.
Select
the VAT Code for your Standard Rate of VAT (Code ‘1’ in the example)
Note
: You need to ensure that your system is exactly as above.
Your system will automatically use the
correct VAT Rate based on the date of the transaction.
On 1 January
2010
The following should be done on the
first working day on/after 1st January 2010.
Go into Suite File Maintenance, choose
VAT Codes from the Menu below.
Select the VAT Code for your Standard
Rate of VAT (Code ‘1’ in the example)
Ensure that the rate shown on the General Tab is 17.5%.
Invoicing
It is imperative that Customers ensure
that any Invoice Creation period is for a single rate. (ie Invoice Creation for all transactions
01/12/2009->31/12/2009 and a separate Invoice Creation for transactions 01/01/2010
onwards.
For the avoidance of doubt, no single
invoice creation should include transactions dated both before and after the
rate change.
The reasons for this are that many
customers pre-printed stationery layouts only show a single VAT rate. Further, some Accounting Systems will not
accept a batch of Invoices all for Standard Rate with different rate (ie 17.5%
and 15%).
Credit
Notes
You should use a pre-January 2010 date
for Credit Note Tickets raised for the purpose of crediting pre-January 2010
invoices.
Eg
Ticket 000001 Raised on 10/12/08 for
£100+VAT = £115.00
If the customer wants a Credit Note
against this ticket, the Credit Ticket should be dated prior to 1st January 2010. This will ensure that the correct VAT Rate is
used from the VAT Rates File.
Dating the Credit Ticket On/after 1st
January 2010 will have the affect of crediting £117.50.
Eg
Credit Ticket raised dated 10/12/09 for
£110+VAT = £115.00 CORRECT
Credit Ticket raised dated 10/01/10 for
£100+VAT = £117.50 WRONG