TaxCorporate TaxHMRC freezes VAT at 15% for retailers and phone companies

HMRC freezes VAT at 15% for retailers and phone companies

HMRevenue and Customs gives New Years' Day VAT fillip to hospitality businesses and mobile phone operators

The taxman has given pubs, clubs, restaurants, hotels and mobile phone
operators an extension allowing them to charge the 15% VAT rate until 6am on New
Year’s Day.

HMRevenue& Customs has extended the olive branch to spare the many
businesses catering for customers at the stroke of midnight on 31 December a
large and costly burden, when the rate of VAT reverts to 17.5%.

HMRC said: “In order to assist businesses in this position HMRC will allow
them to account for VAT at 15 per cent on takings received up to the earlier of:

-the end of trading of the 31 December session or

-6am on the morning of 1 January 2010.”

However the taxman has been careful to limit the extension.

It is restricted to those businesses open at midnight on 31 December 2009
that account for VAT at the point of sale such as businesses on a retail scheme
– pubs, shops, restaurants etc, HMRC emphasised.

It will not apply to mail order or on-line retailers or businesses that
account for VAT on the basis of VAT invoices issued, or pre-payments for
supplies of goods or services to be provided after 6am on 1 January 2010.

Amanda Tickel, Telecom Partner at KPMG believed the mobile sector would be
particularly relieved HMRC has responded to retailers’ calls to avoid complex
billing system changes during one of their “most frantic trading points of the
year.”

“The volume of New Years Eve texts and calls make it one of the most intense
times for mobile traffic,” Tickel said. Having to charge one VAT rate for calls
made at midnight and a different rate for those at one second past 12 for this
scale of network traffic would be a large and costly burden.

“In responding to their calls to delay this change even for a few hours, HMRC
have recognised the considerable effort required by all retailers to implement a
VAT rate change, because it impacts on point of sale material, pricing and EPOS
systems.”

Read HMRC’s terms
and conditions for the extension

Related Articles

‘Google tax’ nets HMRC £281m

Corporate Tax ‘Google tax’ nets HMRC £281m

3m Emma Smith, Managing Editor
OTS report: Corporation tax should follow accounts

Corporate Tax OTS report: Corporation tax should follow accounts

5m Alia Shoaib, Reporter
HMRC tax evasion assistance requests double in five years

Corporate Tax HMRC tax evasion assistance requests double in five years

5m Emma Smith, Managing Editor
Spring Budget 2017: Making Tax Digital

Business Regulation Spring Budget 2017: Making Tax Digital

9m Shereen Ali, Deputy Editor
Tax fraud loses HMRC £16bn

Corporate Tax Tax fraud loses HMRC £16bn

10m Emma Smith, Managing Editor
HMRC nets £2.6bn in corporate tax from big businesses

Corporate Tax HMRC nets £2.6bn in corporate tax from big businesses

10m Accountancy Age editorial
Tax crackdown brings in £468m for HMRC

Corporate Tax Tax crackdown brings in £468m for HMRC

11m Accountancy Age editorial
Treasury Select Committee report released on Making Tax Digital

Accounting Standards Treasury Select Committee report released on Making Tax Digital

11m Stephanie Wix, Writer