20% VAT rate guidance for UK customers

Presumably egged-on by the ease with which online accounting software handled the last two VAT rate changes on-the-hoof, the UK Government will again change the standard rate of Value Added Tax on 4 January 2011, this time raising it to 20%. Sorry about that.

We’ve written up some Help advisory notes which should cover most things from a Xero perspective, and there’s a bunch of technical guidance from HMRC if you need it. It’s also advisable to check with an accounting professional if you’re particularly unsure about something – if you don’t have a Xero friendly accountant, you could take your pick from one in our Partner Directory.

To recap what Xero will do automatically:

  • update default tax rates
  • update repeating invoices
  • make bank reconciliation functions date aware

What Xero won’t do:

  • accounts receivable draft or awaiting approval invoices
  • accounts payable draft or awaiting approval invoices
  • unsubmitted or pending expense claims
  • draft manual journals
  • update the tax on Repeating Transactions with adjusted VAT

So, be sure to review the above items and:

  • check the correct VAT tax rate is used
  • check tax rates on draft documents
  • review repeating invoices

At least this year you can have a wee drink to bring in 2011 before having to worry about sitting down and checking off your VAT changes for January 4.

3 Comments

Responding to the VAT increase: the cloud v on-premise scorecard AccMan
January 1, 2011 at 10:40 pm

[…] issued a blog post mid December talking about the pieces they automate and the things customers will need to do for themselves. Again, they provide a reasonable amount of […]

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