ARTICLE · 01 NOVEMBER 2009

VAT Focus - A Round-Up Of Recent VAT-Related Developments, October 2009

Smith & Williamson

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The standard rate of VAT will return to 17.5% on 1 January 2010. This increase in VAT will have an immediate bottom-line impact for businesses selling goods or services that cannot immediately increase prices and for businesses that are unable to reclaim VAT in full.

United KingdomTax

Martin Sharratt

VAT rate change 1 January 2010

The standard rate of VAT will return to 17.5% on 1 January 2010. This increase in VAT will have an immediate bottom-line impact for businesses selling goods or services that cannot immediately increase prices and for businesses that are unable to reclaim VAT in full.

Businesses selling goods or services spanning the VAT rate change must determine the correct rate of VAT to apply, subject to complicated rules. There are special provisions which allow the existing 15% rate to be used in certain circumstances after 1 January 2010. However, 'anti-forestalling' legislation will restrict the extent to which the 15% rate can be applied after 1 January 2010 to prevent the abuse of these special provisions.

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