The 12 VAT rules of Christmas – Day 10
On the tenth day of Christmas….
- Time to curl up on the sofa in front a roaring log fire with a glass of mulled wine and watch a Christmas movie – but don’t rent them! As with presents, buy your films from one of the many VAT-free import online retailers and for the ultimate VAT-free munchie opt for microwave popcorn or Pringles.
- Businesses on the flat rate scheme should take the opportunity to review their position. Revised flat rate scheme rates will become effective at the time of the rise so take advice to establish if there is the chance to use a lower banding. This could have a considerable impact on cashflow.
- Christmas is a time when charities may be reliant on voluntary or seasonal staff – don’t overlook their training so that VAT free sales are recorded correctly.
The 12 VAT rules of Christmas – Day 6
On the sixth day of Christmas ….
- Looking for the ultimate outfit for the office Christmas party? Remember that all adult clothing carries VAT, so opt for vintage chic and visit your local charity shop, and get a double saving – the clothes will be VAT-free and cheaper.
- Retailers should ensure their POS systems can identify goods bought before the rise so that any later refunds reference the rate that was applied for the original supply.
- During an event, if you are asking for any kind of monetary donation, make sure that it stays VAT free by not offering to provide anything in return for the donation.
The 12 VAT rules of Christmas – Day 4
On the fourth day of Christmas….
- After a morning’s shopping, no doubt you’ll be feeling peckish. Tuck into a homemade VAT-free packed lunch instead of heading for the nearest department store restaurant.
- Businesses need to factor in the VAT rise to cashflow forecasting. Depending on your market, there is likely to be a rush of sales before the rise and a slump afterwards with the usual post-Christmas credit card hangover.
- As a charity, you should limit the number of fund raising events you hold to a maximum of 15 in a particular location in any given year.
The 12 VAT rules of Christmas – Day 3
On the third day of Christmas….
- When going to the shops, avoid driving your car with standard rated petrol and catch the bus or train instead – you’ll also avoid the queues in the car park too!
- As the vast majority of people will be aware of the VAT rise, a pre-Christmas marketing push could encourage customers to purchase now. After the rise, holding any prices as they are could provide a competitive edge especially if you can boost margins on other lines to compensate.
- As a charity, don’t charge an entrance fee to your event. This way you avoid paying VAT on the amount and can use this to encourage people to come along.
A positive side-effect to the VAT rate rise for retailers
We had a question from a client which raised an interesting point this week, one that was actually obvisous but not one we have come across before. It concerns the levels of commission stores operating the retail exports scheme will receive after the change of vat rate.
We are all aware that retailers will need to review prices post 4 January 2011 to reflect that a higher proportion of the ticket price will need to be paid over in VAT. However, there can be benefits. For example, some retailers operate a Retail Export Scheme. This is where the VAT is refunded to a traveller when they leave the country with goods purchased in the UK. Normally the customer is not refunded all of the VAT; the refund is less an administration fee. The fact that the administration charge is usually based on a percentage of the VAT refunded means that a rise in VAT charged will lead to more commission.
One other point; the commission itself is zero rated, which means that the VAT increase will not affect it at all!