HMRC have published a helpful brief (Revenue and Customs Brief 68/09) detailing special arrangements for businesses operating beyond midnight on 31 December 2009.

Under the arrangements, HMRC will allow certain businesses to account for VAT at 15% on takings received up to the earlier of:

·         The end of trading of 31 December session; or      

·         6am on 1 January 2010.

This special treatment is restricted to businesses open at midnight on 31 December and which account for VAT at the point of sales e.g. pubs, shops or restaurants.

The special arrangements will not be available to:-

·         Mail order or online retailers;

·         Businesses that account for VAT on a VAT invoice basis;

·         Pre-payments for supplies of goods or services to be provided after 6am on 1 January 2010; or

·         Sales made through coin operated, or similar, vending, amusement or gaming machines etc.

HMRC have confirmed that they will be operating a light touch in terms of errors made in the first VAT return after the change, where the error relates to a change of rate matter.  They therefore do not plan to target rate of change errors that are unlikely to lead to any material net revenue loss but will be more stringent where the supply is to a customer who is not able to recover VAT where there is likely to be an overall loss of tax.

When applying penalties, HMRC will take into account the difficulties a particular business may have faced in adjusting to the change in rate.

For further information, please contact our VAT consultant, Andy Branson.

Posted on 18 Nov 2009