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Mercedes Oliveira

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VAT reduced to 15%
November 25, 2008

VAT reduced to 15%

Well, I guess you’ve noticed that the Government has announced that the VAT rate is to reduce to 15% from Sunday night?

We’ve started to receive questions on how to change our clients’ systems to reflect the new rate, so I thought it would be useful if I circulated a quick email to highlight some of the technical challenges this presents.


What do you need to look out for… ?

Accountancy Software packages such as Sage and QuickBooks need to have an additional VAT code setup. Remember that some of your transactions may span the 1st December, and therefore may be subject to two different VAT rates (for example, you may have sold a year’s subscription to a service that spans the 1st December).

Invoicing isn’t always done through the main accountancy software. Many companies use additional software to generate their invoices (Time and Expense Recording software, or an in-house developed Access Database or Excel Spreadsheet). You will need to ensure that all invoices generated from the 1st December have the correct VAT calculations on them.

Point of Sale (PoS) systems need to be updated with the new VAT calculations. You need to look at your hours of business, and ensure you can factor in the change in the ‘closed’ period from the end of Sunday 30th November until you re-open on Monday 1st December.

This also applies to any Online Trading Applications that you have. Many businesses rely on their website to generate sales – so, over the course of Sunday night, you need to have your web developer update the calculations in your shopping cart software to apply the correct VAT calculations. Be aware, of course, that your delivery charges may change as their VAT changes.

Forecasting and Reporting – make sure that all your Excel Spreadsheets have been updated to reflect the changed rate. You’ve probably got quite a few spreadsheets lying around that you update from time to time – if these make any automatic calculations for VAT, then they need to be amended. (This might be difficult if the clever person who wrote the calculations has left your organisation!).

And finally, remember to make a note of all the changes you’ve made – because you’ll need to change them back on the 31st December 2009!

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