As we brace ourselves for an increase in VAT, Maximillion’s Finance Manager Ramu explains how to prepare for the change and save the 2.5% increase:
In his 2010 Emergency Budget the Chancellor announced an increase in the standard rate of VAT from 17.5% to 20% effective from 4 January 2011. As our services are continuous, i.e. we make a single supply of a service which is carried out over a period which commences before 4 January 2011 but is not completed until after that date, then Maximillion can raise a VAT invoice at the 17.5% rate.
To benefit from this saving, your event which is to be held after the 4th January 2011 will need to be contracted in November or December with payment made before 4 January 2011. The advantage of saving 2.5%, against the drawback of paying earlier than you might otherwise have done, would need to be considered.
Please refer to the following link for further information & guidance.http://www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-guidance.pdf