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Send records in early to avoid 20% VAT rate on accountancy fees

Posted by: edwinsmith on August 31st, 2010

VAT will be increasing from 17.5% to 20% with effect from 4 January 2011. Therefore, it will be beneficial for non VAT registered clients to bring in their records earlier this year so that the required work, such as preparation of tax returns and/or accounts, can be carried out before Christmas in order to save 2.5 % on the VAT included on the cost of accountancy fees.

It is important to note that the accounting and tax work must be carried out before the VAT rate rise on 4 January, so the records must be received in good time to allow this to happen.  However, the deadline is more likely to be before Christmas as most offices close over this period.  A good amount of time can be viewed as approximately 4 weeks.

Alternatively, if you make a payment in advance before 4 January 2011, the VAT tax point becomes the payment date and will incur VAT at 17.5%.

With the 2009-2010 self assessment tax returns deadline being 31 January 2011, the VAT rate change provides a good financial incentive to send records in early to meet the deadline and to avoid the 2.5% increase in VAT.

Please contact us if you have any questions.

Filed under: VAT