VAT rate changes in Emergency Budget?
Much speculation surrounds whether the Government will raise the standard rate of VAT on 22 June.
If as anticipated, the rate is increased to around 20%, it is very unlikely that this will be introduced with immediate effect. The effect on retailers would be particularly harsh as they have just had to deal with the reversion to 17.5% earlier this year. For this reason, it is more than likely that any change to the standard rate would take effect from 1 January 2011.
For supplies spanning the date of the change, there are special transitional rules. It is certain that there will be anti-forestalling legislation introduced to block wide scale planning around the rate change. However, such legislation should not affect normal commercial transactions.
Other possible changes could be to the scope of the zero or reduced rates. Such changes are more difficult to predict.
We will of course keep you up to date via our blogs during the course of Budget day and publications shortly thereafter. Watch this space!
We will be blogging on SME Plus Blog and Tax Plus Blog on Budget day. If you do not already subscribe to our blogs click here for SME Plus Blog or here for Tax Plus Blog to ensure you get our comment and analysis as and when it happens.
Jane Stacey is a VAT adviser and a senior manager at Mercer & Hole. The views given in this blog are personal to the author, if you would like to discuss the contents of this post with Jane you can call her on 01727 869141.
Date: 14th June, 2010
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