Friday, 7 January 2011


Well, I clearly have a reputation for being a pedant, somehow. And so people keep asking for advice on VAT!

So if you are charging for services for January - what VAT rate do you charge?

The rules are in the VAT Act, and have not changed. They are the same any time the VAT rate changes.

It is suppliers choice, not customers. You can either charge based on the "actual" tax point or the effective tax point (e.g. invoice date). So one of these :-

1. Invoice date before 4th Jan, charge VAT on everything at 17.5%
2. Invoice date on or after 4th Jan, charge VAT on everything at 20.0%
3. Split VAT charges so services pre 4th are at 17.5% and those on/after 4th are at 20.0%

What you can't do :-

1. Invoice before 4th Jan, charging VAT at 20% for services before 4th.
2. Invoice on/after 4th Jan, charging VAT at 17.5% for services on/after 4th


(well, almost, special case: if invoice to a connected party (e.g. director or director's wife) who cannot reclaim VAT, charged at 17.5% for any service on/after 4th Jan, then you have to invoice an extra 2.5% VAT. Finance Act (No.2) 2010.)


  1. Pedant? Ha! You just like following rules.

    Is it true that you once spent 5 hours in the shower because it said 'Rinse, lather, repeat' on the shampoo bottle?


  2. The trouble is that you expect everyone else to follow the rules as well!

  3. Well, kind of the meaning of "rules" I feel.