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Where Taxpayers and Advisers Meet

Change of VAT rate - supplementary charge

peter4lc
Posts:2
Joined:Fri Dec 11, 2009 3:24 pm
Change of VAT rate - supplementary charge

Postby peter4lc » Fri Dec 11, 2009 3:34 pm

If a builder issues an invoice in December 2009 in respect of building work which is to start on 4 January 2010 and finish by March 2010, is this subject to VAT at 15% or 17.5%?

The invoice creates an actual tax point in December 2009. None of the four conditions for the supplementary charge applies: there is no connection between the supplier and the customer; the consideration is below £100,000; the supplier is not financing a prepayment; and payment will be due well within six months. So VAT is due at 15%.

But do the "listed supplies" rules apply? Payments will be made at various points throughout the contract; it is a supply of services; and the supplier has raised a VAT invoice in respect of a "billing period" which ends before the period covered by the invoice. The listed supplies rules state that the consideration must be apportioned between the periods on a just and reasonable basis. This would suggest that 17.5% would apply.

However, HMRC have told me that 15% applies in this case. They did not appear aware of the listed supplies rules, let alone how to apply them. Charging 15% on services which are supplied entirely in a period when the rate is 17.5% sounds wrong, especially when it is not normal commercial practice to issue large invoices in advance of work being performed.

Any interpretation of this would be much appreciated.

SeanJames
Posts:165
Joined:Sun Jan 18, 2009 10:13 am

Re: Change of VAT rate - supplementary charge

Postby SeanJames » Sat Dec 12, 2009 12:55 pm

Hello,

I'd say its fairly straight forward from the anti-forestalling guide, and as the invoice is raised in December 2009, but the work wholly takes place in 2010, then I'd say that VAT at 17.5% would be applicable...

Cheers
Sean


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