New Year VAT help for businesses

Some businesses in the leisure, hospitality and catering sectors are to be allowed to continue charging VAT at 15 per cent into the early part of New Year’s Day.

The standard VAT rate is due to revert to 17.5 per cent after midnight on 31 December.

However, HM Revenue and Customs (HMRC) has acknowledged this may cause problems for businesses serving customers through midnight and into New Year’s Day.

Pubs, clubs, restaurants and hotels will, therefore, be allowed to continue charging VAT at 15 per cent after midnight.

Only a limited number of businesses can qualify for the reprieve. HMRC said that it is restricted to those that are open at midnight on 31 December 2009 and that account for VAT at the point of sale such as businesses on a retail scheme (pubs, shops, restaurants).

It does not include mail order or on-line retailers, businesses that account for VAT on the basis of VAT invoices issued, or pre-payments for supplies of goods or services to be provided after 6am on 1 January 2010.

Businesses that do qualify can account for VAT at 15 per cent on takings received up to the earlier of either the end of trading of the 31 December session or 6am on the morning of 1 January 2010.