VAT changes
this information was last updated on:
Friday 1 January 2010 - 09:00
We've listed below some of the common questions we get asked. Just choose the section you're interested in.
If you have any other questions about the effect of the VAT changes in your TAS program, then please email our Software Support Team and we'll answer your questions here.
Q&A on the VAT rate changes
Q&A on the VAT rate changes
- I already have a 17.5% VAT rate in TAS. Can I just use this rate, or do I need to set up another new VAT rate?
You may already have a 17.5% VAT rate in your TAS program, as this was the standard rate before 1 December 2008. If you already have a 17.5% VAT rate you can use that rate and you won't need to set up a new rate. Don't forget to follow through the rest of the advice to make sure that your default VAT rate is set correctly, etc.
- Do I need to use a different VAT rate in TAS? Why can't I just amend my existing standard rate to be 17.5%?
Yes, you need to use a different VAT rate for 17.5% Standard Rate VAT - if you just amend your existing rate you might find this causes you problems later on. For example; if you receive a late invoice from a supplier, if you have to issue a credit note to customer that relates to an invoice from before the VAT rate change, or if you need to edit a transaction for any reason. Using a different VAT rate in TAS will help prevent a transaction accidentally being recorded with the wrong VAT rate.
- I need to issue a credit note to a customer, but it relates to an invoice issued before the VAT rate change. What VAT rate do I show on the credit note?
When issuing a credit note, you should always use the same VAT rate that was used on the original invoice. See item 6.2.3 in the HMRC document.
- I'm on the Flat Rate VAT scheme, does my Flat Rate percentage also increase by 2.5%?
No. The flat rate applicable will vary between different business sectors and the new rate won't necessarilly be the same rate that applied before 1 December 2008. Check the HMRC website for details of the new rates. If you are unsure which rate applies to you, you should contact the HMRC National Advice Line on 0845 010 9000.
- Will this change in VAT rate affect the Fuel Scale Charges?
Yes. The fuel scale charge will be amended to reflect the change in VAT rate. HMRC have published a list of the new scale charges.
- I've issued an invoice with a 15% VAT rate, and now realise the rate should have been 17.5%, what should I do?
If you've issued an invoice with an incorrect VAT rate, you can create a VAT only invoice for the difference in VAT amount. When you receive the customer's payment, you can then allocate the payment against both invoices.
Alternatively, if your customer requires an invoice showing the new VAT rate, enter a Credit Order to reverse out the original transaction at the old VAT rate, then enter a Sales Order with the correct details and the new VAT rate.
- How can I ensure new products I create use the new VAT rate by default in TASBooks (or TAS BOOKS 2 and 3)?
To ensure the new VAT rate is used by default when you create new products, from the menu bar select Central > General Company Information > TASBooks Configuration (option 012, or option 011 in some older programs). In the left-hand pane select Default Settings and in the right-hand pane scroll down to the Product section. In the Product section select VAT rate, and from the drop-down list, select the 17.5% VAT rate. Click OK then click Yes to save the entry.
- How can I ensure new products I create use the new VAT rate by default in FirstBooks (or TAS BOOKS 1)?
To ensure the new VAT rate is used by default when you create new products, check you've followed the instructions on our website to select the new VAT rate in the Default Standard Rate in Company > Company Information > VAT Scheme. For this rate to be used by default, you should also ensure you create your products using the New Product Wizard, either by selecting File > Wizards > New Product Wizard, or by clicking Products from the toolbar then selecting Create a product.
- I've made the VAT changes as recommended on your website, do I need to do anything different when I run my VAT Return?
No, the change in Standard Rate of VAT doesn't affect the way you run your VAT Return at all. If you have used your 17.5% VAT rate transactions with a tax point on or after 1 January 2010, this will automatically be picked up when you run the return, as will any transactions where the old 15% rate applied. You don't need to do anything different.
Note: If you use the VAT Cash Accounting method and have unallocated cash posted prior to 1 January 2010, the 15% VAT rate will apply to these entries. If at a later date you allocate this cash against invoices with a 17.5% VAT rate, the VAT will be adjusted on your next VAT Return, which is perfectly correct.
- How do I know which VAT rate has been used for the transactions on my VAT return?
If you want to see the transactions which are included on your VAT Return, click the View Detail button in the TASBooks VAT Return Manager (or if you use any other program, select 'Yes, show me the underlying details as well' in the VAT 100 Submission Wizard). The VAT 100 Report then displays each transaction included on your return, with the VAT rate applied. If you need to, you can even edit the transactions from this report, for example, if you have applied the wrong VAT rate to a transaction. Simply double-click the transaction you want to change.