HM Revenue & Customs

I went to see Andrew (my accountant) today to sign this year’s 3rd trimester VAT declaration. Discovered that all the things I’d bought online for the business are not valid for declaring. Great, fantastic. So on paper, I actually made a profit! Ah!

I’d bought equipment for a new office; logistical stuff; things for the last trade fair and the shed to use as a warehouse ONLINE and had it delivered to my home. Most online purchases do not offer an option for invoicing, there were no prompts for imputing VAT numbers. Andrew suggested that I should have bought all these things in store so that invoices, with my VAT number, can be issued. Is he serious?

This afternoon, I received a chain email from Sage, Europe’s largest business software company. They made the announcement below in light of the new legislations:

1.VAT Rate
Firstly, on Jan 1 2010, the VAT rate is going to change back to 17.5% and this is set to affect almost every business
2.EC Sales List Submissions
Secondly, from the same date, it won't only be sales of goods to the EC that need to go on all EC Sales List submissions – sales of services must be recorded too. This will affect your business if you're registered for VAT in the UK and supply services to traders registered for VAT in other EC Member states
3.VAT Filing
Thirdly, under Government proposals many businesses will need to start submitting their VAT returns online after Apr 1 2010. This will apply to all businesses that are VAT registered and have a turnover of more than £100,000, as well as those businesses who register for VAT after Apr 1 2010.

Point 1-VAT Rate. Has the government gone bonkers? An increase of 2.5% (from 15% to 17.5%) in VAT would seriously affect most UK business and could mark the downfall for businesses already crippled by the economic crisis. Furthermore, it will mean that the average house hold will have an increase of 2.5% to their annual expenditure on most goods ( foods, books and children’s shoes & clothes are exempt and will remain at their current rates I presume) The affective date is 1 Jan 2010 and not 1 April. Surely it will be  book-keepers’  nightmare come true.

I haven’t heard about the VAT increase in any of the media sources. I receive, on average, two letters per week from HM RC for one thing or another, but nothing about the VAT changes, nor information about the other 2 points for that matter.

I’ve absolutely no doubt that news of the VAT increase will break out in mass media at the onset of the Christmas buys. Dirty ploy by the government to create a massive spending frenzy and utilise New Year’s hang overs to soften the blow. On one hand the extra cash flow will aid to ease the recession, on the other, it will mean more revenue for the government. Still it’s simply deplorable. What happened to all those billions they pumped into the banks? Have you seen any of it? Cos I haven’t! Why don’t they just scrap the Trident Defence, which would release some 20 billion? Why suck the pennies out of the citizens to balance the sheets?

2. Point 2- EC Sales Submission List (ESL). This point has major implications for me as most of my clients are from other EU states. The ‘propaganda’ sprill; reducing fraud; reducing time for submitting for ESLs is simple bullocks.  But there is good news; a brand new electronic system which will be introduced across EU for VAT claims from other state members using a standardise form through the UK Government Gateway, rather than direct to the Member State of Refund as of present. Pure Mozart to my ears! If you’ve had any dealings with the French  Direction Generale Des Finances Republiques, you can share my euphoria. Bastards, still owe me thousands of euros of 19.6% TVA (VAT) that I pay to exhibit at Paris trade fairs.

3. Point 3- Vat Filing. Hahahahahahahahahahaha!!!!!!!!!!! I’d almost fell over when I saw this point. Relate it to my online buys. What’s apparent is that the UK administration lags behind the Spanish. My Spanish my accountant had been submitting my VAT returns online ever since I opened the business in 2002.