Were you suprised at today's VAT rate increase?

When we looked into our crystal ball a couple of months ago we predicted that the rate of VAT would rise to 20%. What we didn't expect was that it wouldn't come into effect for another 6 months. So, today's news from the Chancellor that the rate of VAT will not go up until 4 January 2011 has come as quite a surprise to us all.

The majority of people who took part in our Budget Survey agreed that the rate would be rising to 20% within 3 months of the announcement, only 6% thought it would be the New Year. And, with this increase in VAT set to raise £13 billion in revenue, we all believe this will go someway to reducing the national deficit.

So, there we have it, we now know that the rate won't be increasing for some 6 months, some temporary relief for the consumer, however, we must remain mindful that an increase is just around the corner and there is still the potential for further rises to the rate of VAT.

In response to today's news, John Crawford, our Managing Director comments: "Such a rise will mitigate the bitter medicine of spending cuts and deferring the rise until next year in the hope of stimulating consumer demand will give time for businesses to prepare – important since many are still fighting for their lives.

Whether registered for VAT or not, businesses will pay more for their goods and materials. Either they subsume those costs and reduce their margins, or they raise their prices.
As ever, consumers will pick up the tab in any increase passed on in the supply chain when they buy the affected goods and services.
If you are going to have to spend 2.5% more on your big ticket VAT items, it makes sense to buy them before the end of the year."

Look out later for full details of the changes to VAT in our budget newsletter.

John's in demand as VAT rate rise is announced!

With the announcement today that the rate of VAT will be rising to 20% on 4th January 2011, our Managing Director is having a busy day today responding to the news with our local TV and radio stations.

You can listen to him on:

3.30pm BBC Radio Gloucester on FM - 104.7, 95.8, 95, AM - 1413
http://www.bbc.co.uk/iplayer/playlive/bbc_radio_gloucestershire/

5.00pm BBC Radio Solent on FM 96.1 & 103.8
http://www.bbc.co.uk/iplayer/playlive/bbc_radio_solent/

5.45pm BBC Radio Bristol on 94.9, 103.6, 104.6, AM - 1548
http://www.bbc.co.uk/iplayer/playlive/bbc_radio_bristol/

6.30pm Points West, BBC One (West only)
If you live outside of the West area, then you can view this on Sky Channel 986

The importance of charging VAT correctly!

A case has come to our attention this week regarding a refused DIY Housebuilder's claim.

The taxpayer paid VAT to a builder on a new build dwelling thinking they could reclaim the VAT from HMRC. HMRC refused as the VAT was incorrectly charged (zero rate applicable to new build), the taxpayer needed to get credit from their builders’ yet two of his suppliers had refused to refund.



The Tribunal agreed with HMRC that it was not up to HMRC to refund VAT incorrectly charged. This confirms again that VAT incorrectly charged CANNOT be reclaimed from HMRC.



You have been warned....

The Top 5 VAT pitfalls of developing a listed property and how to avoid them

Read my new blog for Country Life Magazine:

http://tinyurl.com/2u43836

Next time I'll be talking about discuss specific technical terms and what they mean for a property owner.

The VAT News June 2010

The June Newsletter is now available on our website. In this issue:

• Budget June 2010 - what will it hold in store for VAT?


• Our survey said... - what do you think will happen to the rate of VAT? Take part in our quick survey and you could win a bottle of champagne


• Even more ways to talk to us - join us on Facebook, Twitter and LinkedIn


• HMRC News round-up


• News from the Tribunals


• Jobs for the month

Click here to read more...

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