Most businesses should now be aware of the increase in the standard rate of VAT to 20% on 4th Janauary 2010, however, many are still unsure of the detail. Set out below are a few of the important issues for VAT traders:
“Can I simply invoice now and receive payment later” – In short yes, provided 4 key test are met. These are:
- There is no connection between supplier and customer
- The supplier is not funding the purchase (ie. the supplier lends money to the customer in order that the customer can then purchase the goods).
- Payment is due no more than six months after the invoice date.
- The pre-invoiced amount does not exceed £100,000 exclusing VAT.