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2010 VAT changes and how they affect you
There are a number of changes in VAT legislation that come into effect from next year, some of which come into force from 1 January 2010. You and your business need to be aware of these changes and how they affect you. Reassuringly, we at FW Stephens are always here to assist you with these issues and if you have any queries regarding these changes then please get in contact with your relationship contact.
Change in VAT rate
From 1 January 2010 the standard rate of VAT returns to 17.5%. Please see the detailed Briefing Note to understand how this will affect you.
Online filing of VAT Returns
From 1 April 2010 all business with an annual turnover of £100,000 (VAT exclusive) or more must file their VAT Returns online. Any businesses registering for VAT on or after that date will also have to do so online, whatever their turnover is. We will be contacting separately our clients for whom we prepare VAT returns to ensure that this process of online filing is undertaken efficiently.
Overseas business - Cross border changes
There are major changes to cross border VAT rules applying to goods and services which take effect from 1 January 2010. These are:
- Changes to the Place of Supply Rules for Services. Please see the detailed Briefing Note to understand how this may affect you.
- If your business incurs VAT in other EU Member States then a new online VAT refund procedure is being introduced to replace the current paper based system. Businesses established in the UK will submit their claims to HMRC here in the UK rather than the authorities in the other EU Member States.
New EC Sales List Rules for Goods and Services
- New EC Sales List (ESL) required for services supplied. UK VAT registered businesses that supply services to EU businesses where the place of supply is the customer's country will have to complete a ESL for each calendar quarter and submit this within 14 days for paper returns or 21 days for electronic returns.
- UK VAT registered businesses that supply goods to EU businesses already have to complete an ESL for each calendar quarter. In 2010 the submission deadline will be reduced to 14 days for paper returns or 21 days for electronic returns - a considerable reduction from the current 42 day limit.
- Where the value of the supplies of intra-Community goods (excluding VAT) exceeds £70,000 in the current quarter, or any of the previous four quarters - EC Sales lists must be submitted monthly. This threshold will be reduced to £35,000 (excluding VAT) with effect from 1 January 2012.
The ESLs are part of the EU's anti-fraud strategy. To ensure uniformity across the Union there will be changes to the time of supply of cross border services which are subject to the reverse charge as mentioned above and in this Briefing Note.
HMRC guidance on these Cross Border Changes can be found here:
http://www.hmrc.gov.uk/vat/cross-border-changes-2010.htm
Tour Operators Margin Scheme
There are also some changes to the TOMS coming into force on 1 January. These will affect businesses supplying travel services to other businesses and schools, and the valuation of in-house supplies.
HMRC guidance on these changes to the TOMS can be found here:
http://www.hmrc.gov.uk/briefs/vat/brief2709.htm
If you have any queries on the matters raised above then please get in touch with your relationship contact here at FW Stephens, and we will ensure that your business is prepared for these changes and you can focus on driving your business forward.
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