Value Added Tax

From	1 Dec 2008	1 Jan 2010
Standard rate	15%	17.5%
VAT fraction	3/23	7/47
Reduced Rate	5%	5%
Taxable Turnover Limits from 1 May 2009
Registration - last 12 months or next 30 days over	£68,000
Deregistration - next 12 months under	£66,000
Annual accounting scheme	£1,350,000
Cash accounting scheme	£1,350,000
Optional flat-rate scheme	£150,000

VAT: Change of standard rate

The standard rate of VAT will return to 17.5% from 1 January 2010. Targeted legislation will counter schemes that purport to apply the 15% VAT rate to goods or services to be supplied on or after the date that the rate returns to 17.5%.

Cross-border VAT: Changes to EC sales lists

This measure introduces a requirement for UK businesses that supply services where the place of supply is the customer’s country to complete EC Sales Lists (ESLs) for each calendar quarter. The changes will have effect on and after 1 January 2010.

Cross-border VAT: Changes to place of supply of services rules

Changes were announced to the place of supply of services rules. The place of supply rules determine the country where a supply of services is made and where any VAT is payable. They also determine whether, if VAT is due on a supply, it should be accounted for by the supplier of a service or their business customer.

The new rules aim to ensure that, as far as possible, VAT is due in the country in which the service is consumed (e.g. where the customer is established) rather than where the supplier is established. The result for UK business customers is that they will be liable to account for UK VAT on most services provided by their overseas supplier under the reverse charge provisions, rather than the supplier charging VAT. This forms part of a package of changes designed to modernise the VAT system for cross-border trading, and to counter fraud. The changes will come into effect from 1 January 2010 across the EU.