The VAT rate change – are you ready?

The VAT rate change - are you ready?
As you will no doubt be aware there will be an increase to the rate of VAT to 20% commencing 4 January next year. Is your business geared up for this change?

Your business needs to start making its customers aware of the VAT rate change as soon as possible. This will avoid misunderstandings and customer confusion. It is important to clarify that the increase is due to the VAT rate change and that it is a legal requirement.

It may also be appropriate to give customers practical examples of what the prices will be. Any business that interacts directly with the public, such as retailers, should display announcements in their shops as well as mentions on their websites.

The change mid-month is a major issue for anyone trading online or off-line around the New Year  period as you will need to ensure you get the correct VAT rate applied for each transaction. If you are using any automated/ e-commerce systems, who is going to change the rate – your provider or you?

You will need to ensure that your staff been informed and that they understand the rules around credit notes, and transactions that span the transition period?

If you interface transactions from one system to another i.e. Paypal into your bookkeeping software you will need to ensure the VAT element be handled properly within both systems?

If you operate any special schemes, such as Flat Rate, it is vital to ensure you review how this will affect your business.

Mistakes can be expensive, in terms of VAT penalties and unnecessary administration during the transition. It’s therefore worth planning and implementing carefully. HMRC have issued guidance notes on their website.

For advice and assistance please feel free to contact PAH Accounting and arrange a consultation.