The standard rate of VAT is set to rise on 4th January 2011 to 20% from 17.5%. All sales on or after this date will be at the new higher rate.

If you or your business is not vat registered, things to consider are:

1. Consider making purchases, particularly large purchases, before 4th January in order to minimise cost.
2. Consider whether this might put you at a price advantage compared to your VAT registered competititors.

If your business is VAT registered, further things to consider are:

1. If you provide a service that spans 4th January then you may apportion your invoicing before and after to apply the different rates. This apportionment must be done on a "reasonable" basis.
2. If you operate on a flat rate scheme, new flat rates will apply from 4th January.
3. The VAT fraction to calculate the VAT on a VAT inclusive figure will change to 1/6.
4. Any bad debt relief claimed must be claimed at the rate applying at the original tax point.
5. VAT fuel scale charge rates will change from 4 January 2011.
6. There are anti-forestalling and anti-avoidance measures in place to prevent any advantage being taken of the change in rates in order to avoid VAT.

If you would like further information and advice on what steps you need to take the please contact us for assistance on 01993 775063.