15% VAT rate extended for New Year's Eve traders
Pubs, clubs, restaurants and other retail businesses remaining open past midnight on New Year's Eve will be allowed to continue charging VAT at 15% on their sales until they close or until 6am on 1 January 2010, whichever is the earlier, the Financial Secretary to the Treasury confirmed today.
Similar arrangements will apply to telecommunications companies in respect of calls and texts made up to 6am on 1 January.
Financial Secretary to the Treasury, the Rt Hon Stephen Timms MP, said:
"New Year's Eve celebrations are a vital source of income for many in the service sector. The Government recognises that it would be very difficult for them to make the necessary changes to account for VAT at 17.5% immediately after midnight. To make the transition as easy as possible retail and telecommunication businesses will be able to charge VAT at the old rate into the early hours of New Years Day.
"I announced in May 2009 that HMRC would be allowing a 'period of grace' to help businesses trading across midnight on 31 December in implementing the VAT rate change, and that they would work with business on the details. I am very pleased that HMRC is now able to confirm these arrangements and I hope that those businesses affected will find them helpful."
Details:
The 'period of grace' is restricted to those businesses that account for VAT at the point of sale such as businesses on a retail scheme - pubs, shops, restaurants etc and to the cost of calls or texts made and billed in the early hours of January 1. It will not apply to businesses that account for VAT on the basis of VAT invoices issued or to mail order or on-line retail sales.
HM Revenue & Customs (HMRC) will publish a Revenue & Customs Brief on the HMRC website (www.hmrc.gov.uk) shortly, explaining the extent of the concession in more detail.
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