Posted - 31/12/10 | 0 Comments

Clear is ready for the UK VAT rate change on 4 January 2011

On 4 January 2011 the rate at which VAT is levied on applicable goods and services changes from 17.5% to 20%. If you are VAT registered this change will effect what you must put on your invoices. At the moment, if you are VAT registered, Clear will apply VAT at 17.5% to each line of your invoice by default. This is clearly shown as you create a new invoice. If you are eligible to apply a different rate of VAT (Reduced Rate or Zero Rate) then you can select these rates for each line from the drop down list in the “VAT Rate” field as you create a new invoice (see the screen shot below).

The change to cater for the new VAT rate is already made and available in Clear. You will see that when you create a new invoice, the drop down list in the “VAT Rate” field now includes an option to add VAT at 20%. This is shown in the screen shot below:

VAT is usually charged on the basis of when the goods or services are delivered and not when the invoice is sent. The 17.5% VAT rate will remain available for use for the foreseeable future in order that you can invoice for goods and services delivered before 4th January. However please note that from 4th January the default VAT rate applied on your invoices will be 20%. If you want to change that to 17.5% you will have to select this rate from the drop down list in the “VAT Rate” field.

To save creating more invoices than is necessary, it is possible and quite legitimate to include different VAT rates on the same invoice. So you could apply the old 17.5% VAT rate to some lines (where those goods and services were delivered before 4 January 2011) and the new 20% rate to lines for goods and services delivered after 4 January 2011. Don’t worry about all of the calculations, Clear takes care of that!

If you have any doubts about which VAT rate you should apply on invoices around the changeover date it is probably wise to speak to your Accountant.

The Clear Team

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