Island Life Magazine Ltd October/November 2010 | Page 159

island business

Island Life - October/November 2010
By Esme Shakeshaft
Moore Stephens Accountants

Tel: 01983

824812

Pre 4th Jan VAT issues
Apart from its
effect on the
cost of living,
the hike in the
standard rate
of VAT to 20% on 4 January next year
will have ramifications for registered
traders. We have outlined a few of the
likely topics that should be considered
prior to this date, see below:
1. Make sure you are clear what
changes need to be made to your
accounting software to accommodate
the rate change. There will also be
added complications if you have
adopted the cash accounting or flat
rate scheme.
2. If you have supplies that will run
over 4 January date, for instance
construction contracts where part
of the work is done before and part
after the date of the rate change,
care is required. Explaining the correct
strategy to adopt is beyond the scope
of this article but please call for more
information if you will be in this

position next year.
3. Clubs and sporting organisations
will need to take care when charging
members annual subscriptions that
bridge the 4 January 2011 date.
The legislation that you will need
to observe over the rate change
period next year is known as the
"anti-forestalling legislation". This was
introduced to stop large transactions
gaining an unfair advantage and
accordingly its application in practice
will be fairly limited.
In summary the anti-forestalling
legislation applies taking into account
the following factors:
• If your customer can reclaim the VAT
you charge then the rules will not apply.
• The rules only cover transactions that
cover supplies of goods and services
that overlap the rate change date,