29 December 2009

There has been an extension of the 15 per cent VAT rate for New Year’s Eve traders as the HMRC is allowing a ‘period of grace’. Those traders that account for VAT at the point of sale and are trading across midnight on 31 December will be allowed to continue charging VAT at 15% on their sales until they close or until 6am on 1 January 2010, whichever is the earlier.

This means that pubs, clubs, restaurants and other retail businesses remaining open past midnight on New Year’s Eve will not have to make changes halfway through the evening.

Similar arrangements will apply to telecommunications companies in respect of calls and texts made up to 6am on 1 January.

The ‘period of grace’ is restricted to those businesses that account for VAT at the point of sale such as businesses on a retail scheme – pubs, shops, restaurants etc and to the cost of calls or texts made and billed in the early hours of January 1.  It will not apply to businesses that account for VAT on the basis of VAT invoices issued or to mail order or on-line retail sales.

For further information please see - http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-changes.htm.