VAT
Rate Changes – 4 January 2011
On 22nd June 2010, the
Chancellor confirmed his previously announced changes to the VAT rate on Goods
and Services.
The standard rate of VAT is to change
from 17.5% to 20% from 4th January 2011.
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 4th January 2011
Changes
required on the first working day on/after 4th January 2011
It
is imperative that these changes are made to ALL live databases on your system.
Prior to 4
January 2011
Prior to 4th January 2011, you should
set up the VAT Rates history table. This
holds the VAT rate applicable from specific start dates.
The current 17.5% rate commenced on 1st
January 2010. This should be entered
into your VAT rates table along with the future 20% rate commencing on 4th January
2011.
The following should be done BEFORE 4th
January 2011.
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 4 January
2011
The following should be done on the
first working day on/after 4th January 2011.
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 20%.
Invoicing
It is imperative that Customers ensure
that any Invoice Creation period is for a single rate. (ie Invoice Creation for all transactions
01/12/2010->03/01/2011 and a separate Invoice Creation for transactions 04/01/2011
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 20%).
Credit
Notes
You should use a pre-4th January
2011 date for Credit Note Tickets raised for the purpose of crediting pre-4th
January 2011 invoices.
Eg
Ticket 000001 Raised on 10/12/10 for
£100+VAT = £117.50
If the customer wants a Credit Note
against this ticket, the Credit Ticket should be dated prior to 4th January 2011. This will ensure that the correct VAT Rate is
used from the VAT Rates File.
Dating the Credit Ticket On/after 4th January
2011 will have the affect of crediting £120.00.
Eg
Credit Ticket raised dated 10/12/10 for
£110+VAT = £117.50 CORRECT
Credit Ticket raised dated 10/01/11 for
£100+VAT = £120.00 WRONG