Date of issue: 30TH April 2009
VAT CHANGES IN 2010 WILL CAUSE MORE CHALLENGES FOR BUSINESSES
While businesses have only recently
got to grips with the reduction in the standard rate of VAT to 15%,
chartered accountants
“Not only will the standard rate of VAT revert back to 17.5% or, as some pundits predict, increase up to 22.5%, with all the associated amendments to accounting systems, but new reporting requirements will also be introduced in respect of intra EC trade,” says director of VAT Services Steven Simmonds.
Currently, most organisations that trade with businesses in other EC member states submit quarterly EC Sales Lists (ESLs) for goods. From 1 January 2010 a new European system, will come into force across all member states regarding the implementation of wide-ranging changes to the way EC businesses deal with one another for VAT purposes and how they report trade to the tax authorities.Whereas ESLs are currently only necessary for sales of taxable goods, under the new system there will be a requirement to submit ESLs for taxable ‘reverse charge’ services.
New rules on the place of B2B
supplies will also be phased in with the place of supply shifting to the
principal place or business of the customer rather than where the supplier
belongs an extention to the ‘reverse charge’ rules.
Plans are also underway to introduce new rules for B2C
supplies.“It’s important that businesses ensure their accounting
software is ready and able to identify these ‘reverse charge’ services
and train their staff to recognise when and where they are made or
received, so that these supplies are posted correctly to their accounting
systems,” adds Mr Simmonds.
With effect from 1 April 2010 HM
Revenue & Customs plans to phase out paper VAT Returns for businesses
with an annual VAT exclusive turnover of £100,000 or more.
In addition, any business registering for VAT from that date will
be required to submit returns and pay VAT electronically.
Although paper returns will still be allowed for businesses with a
turnover of less than £100,000, this is due to be reviewed in 2012.
Businesses should start thinking now about compliance with the new rules and are advised to contact their VAT advisor for further information on the forthcoming changes and their likely impact.