Will Retailers get More Time for VAT Rise?

The Government is considering extending the current 14-day period retailers have to re-price their goods following a VAT change, so that they have more time to prepare for January’s return to a 17.5% rate. A consultation has been launched on whether to amend the Price Marking Order so that retailers have 28 days to change their price labels when the rate of VAT increases from 15% to 17.5% on 1 January 2010. Currently, retailers are obliged to change the price labels on all their products within 14 days of a VAT change, or risk prosecution. “When the reduced rate of VAT was introduced last December, customers and enforcement bodies were prepared to tolerate differing prices being charged at tills from those shown on the shelf or on item labels,” said a British Retail Conso... »

Fuel Duty Rise will Slow Down Recovery for Small Firms

Fuel Duty Rise will Slow Down Recovery for Small Firms

The latest 2p increase in fuel duty will hit small firms hard, and is likely to impact on economic recovery, the Federation of Small Businesses (FSB) has warned. The rise is the third increase in nine months, and brings the average price of petrol across the UK to around 105 pence a litre. Calling the fuel price increase an unwelcome overhead at “a very difficult time”, the FSB warned that it would set back business recovery for many firms. “High fuel prices cause difficulties in every part of the economy, but small businesses that are dependent on cars, those who travel to their customers, or whose business is in haulage or logistics, are hit particularly hard,” said John Wright, National Chairman Federation of Small Businesses. “Rises in fuel duty could have... »

VAT – Guide to the Change in the Standard Rate

In his Pre-Budget Report on 24 November 2008 the Chancellor announced that the standard rate of VAT will be reduced to 15% on 1 December 2008. This guide sets out the key points which businesses need to be aware of as they implement the change. It also tells you where you can get further information. A copy of this guide is being sent to all VAT-registered businesses in the UK by the HMRC. What do I have to do? For any sales of standard-rated goods or services that take place on or after 1 December 2008 you should charge VAT at the new rate of 15%. This means that cash businesses which currently calculate their VAT using the VAT fraction of 7/47 should, from 1 December, use the new VAT fraction of 3/23. Which of my sales are affected? Only standard-rated sales are affected. There are no ch... »

VAT – Avoiding the ‘Penalty trap’

Making a mistake in your VAT calculations can prove costly, particularly in view of the recent changes to the penalty regime. Of course, avoiding errors altogether is ideal, but what action should you take if you do make a mistake? If you make an error in your VAT calculations you may include the under or overpayment in your next VAT return, providing the net errors for the period are within the specified limits. New rules For VAT periods ending before 30 June 2008 this error reporting limit was £2,000. However, for VAT periods beginning on and after 1 July 2008 this limit is increased to the greater of: £10,000 or 1% of the turnover for the period in which the error is found (box 6 on the VAT return), subject to a maximum error of £50,000. Reporting the mistake Where the... »

Business Mileage:  VAT Fuel Recovery

Business Mileage: VAT Fuel Recovery

For many business owners, motoring costs represent a significant proportion of their firm’s expenditure. As fuel prices have recently climbed to unprecedented levels, reclaiming VAT on car fuel is an ideal way to recover some of these draining costs. However, it is imperative that this process is carried out correctly as this is often one of the first areas that a VAT inspector will study when reviewing your accounting records. If you pay a mileage allowance to your employees for business journeys made in either their own vehicle or a company car, you can reclaim VAT on the fuel element of those mileage payments. How it works: Private vehicles The mileage allowance for private cars is 40p per mile for the first 10,000 miles and 25p per mile for additional business miles driven in the same ... »

A Guide to VAT for Start-up Businesses

A Guide to VAT for Start-up Businesses

Value Added Tax (VAT) is a tax on business transactions of goods and services, and if you are a business owner, it is likely to apply to you at some point. Once the turnover of your business reaches the VAT threshold, £81,000, you must register for VAT – and you have to account for VAT whenever you supply goods and services. You shouldn’t put off VAT registration as this can incur severe penalties and can be expensive as you will have to pay HM Revenue & Customs (HMRC) the tax you should have collected, as well as a possible fine. Below, we have put together answers to the most common questions business owners ask about VAT – this article should provide you with a good introduction to what is often a confusing area of tax law. If you need further information, visit the HMRC websi... »

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