15% VAT rate extension for New Years Eve traders
Businesses such as pubs, hotels, restaurants and clubs which will be open after midnight on New Year’s Eve will be able to continue charging VAT at 15% on sales until they close or until 6am on 1 January 2010, whichever is the earliest.
“This is a welcome and practical concession from H M Revenue & Customs and should allow businesses to continue to trade uninterrupted past midnight on 31 December 2009,” said Hannah Dobson, a VAT director at Smith & Williamson, the accountancy and financial services group.
However, Hannah warned that: “As yet, no details have been issued as to how businesses should record sales up to 6am on 1 January 2010, so care must be taken to show these clearly in VAT accounts and on till rolls, for example.”
However, certain businesses that may be ‘open’ at midnight will be excluded from the concession. These include mail order and on-line retailers and businesses that account for VAT on the basis of invoices issued. Firms should also note that the following sales are also excluded:
- pre-payments for goods/services to be provided after 6am on 1 January 2010; and
- takings from coin operated (or similar) machines; and
- transactions after 31 December 2009 that would be caught by the anti-forestalling rules relating to businesses trying to prolong use of the 15% VAT rate.
Telecommunications businesses will qualify for the concession in respect of calls and texts that take place and are billed up to 6am on 1 January 2010.
“The tax authorities have warned that if businesses try to take advantage of the rules and appear to be trying to prolong the use of the 15% VAT rate, for example, by extending their usual hours of opening until after midnight on 31 December as a means to boost sales, the use of this concession in these circumstances is likely to be refused by the tax authorities,” said Hannah.
For further information:
Hannah Dobson, VAT director on 020 7131 8138
Email Hannah Dobson
Disclaimer
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
Note to editors
Smith & Williamson is an independent professional and financial services group employing around 1,500 people. The group is a leading provider of investment management, financial advisory and accountancy services to private clients, professional practices and mid-to-large corporates. The group operates from offices in London, Belfast, Birmingham, Bristol, Dublin, Glasgow, Guildford, Maidstone, Salisbury, Southampton, and Worcester.
Smith & Williamson Limited
Regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities. A member of Nexia International
