VAT headaches
VAT headaches
If you're charging anything but standard VAT rates on the goods/services you supply it can get complicated - many clients have asked us for the 'rules' on applying reduced rates.
Unfortunately, the answer isn't always simple! Goods and services can be reduced-rated, zero-rated, exempt or outside the scope of VAT. These rates may only apply if certain conditions are met, or in particular circumstances, depending on some or all of the following:
- Who's providing/buying them
- Where they're provided
- How they're presented for sale
- The precise nature of the goods or services
- Whether or not you obtain the necessary evidence
- Whether or not you keep the right records.
The UK agreed a zero VAT rate for certain goods and services categories as part of their EU Accession Treaty. Most 'basic' foodstuffs are zero rated in the UK, for example. That said, we're no longer able to add to these zero rate categories, so the minimum VAT rate that can be applied to any new category is now 5%. 

The 5% VAT reduced rate applies to the provision of the following goods and services:
- Electricity
- Children's car seats, booster seats and booster cushions
- Smoking cessation products
- Sanitary protection products
- Mobility aids for the elderly (installation)
- Renovation / alteration of certain, empty residential buildings
- Converting certain premises into alternative living accommodation
- Energy saving materials.
For a full list see:
http://www.hmrc.gov.uk/vat/forms-rates/rates/goods-services.htm#1
Or just ask us!