Get up to speed with the VAT rate change

THE increase in the rate of VAT to 20 per cent will affect everyone, and businesses should take the time to learn the impact it will have when it comes into effect in January 2011.

THE increase in the rate of VAT to 20 per cent will affect everyone, and businesses should take the time to learn the impact it will have when it comes into effect in January 2011.

Most businesses should already be aware of the practicalities of VAT implementation, said Marcus Ward, VAT director at Price Bailey Chartered Accountants, but those that are not must get up to speed quickly.

Mr Ward added: “Everyone will be affected by this, although in different ways.

Hardest hit will be businesses that are not VAT registered and those that make exempt supplies, as their irrecoverable VAT will increase. If you are in one of these categories you will need to review your budgets and business model.”

He also warned those looking to avoid the higher rate with contrived planning, pointing to the Government’s increased legislation to counter the structured tax avoidance industry.

INFORMATION: Price Bailey’s free budget report uncovers some of the key measure as well as the less publicised changes that are most likely to affect your business or your personal finances. Contact 0800 434 6460 or email laura.kilroy@pricebailey.co.uk.