Service Updates
VAT changes from 1 December 2008 - click here for information on how this affects your payments for a new connection
Reduction in the VAT rate – how does this affect me?
The standard rate of VAT in the UK reduces from 17.5% to 15% on 1 December 2008 for a period of 13 months.
If you have recently received a quote from us - or made a payment to us - you may be wondering how the VAT reduction affects you. We have listed below some frequently asked questions and answers, which we hope will help you with any queries you may have.
If you have still have any questions after reading this document, please contact
08450 702703.
Q: What’s changed?
A: The standard rate of VAT has been reduced from 17.5% to 15%, as of 1 December 2008. All other VAT rates (zero, and reduced) stay the same.
Q. I’ve paid 100% upfront for work which hasn’t started yet. Which rate applies to me?
A. The 15% rate applies and you are entitled to have the 2.5% difference refunded to you on request, however, Her Majesty’s Revenue and Customs (HMRC) rules state that we must process your request by 14 December which means that requests must be received by Monday 8 December at the latest to allow time for our internal approval procedures.
Q. I’m making payments in stages. I’ve already made the first payment and work has started. Do the remaining stages need to be paid with VAT at 17.5% or 15%?
A: Invoices after 1 December 2008 will state VAT at 15%.
Q: I’ve sent my acceptance and a purchase order and you issued me with an invoice - but I haven’t sent my cheque yet. Should I pay the amount on the invoice (with VAT at 17.5%) or pay the amount with 15% VAT?
A: The invoice is the trigger for the tax to be applied (known as the tax point). The amount shown on the invoice should be paid in full.
Q: You issued me with a quotation with VAT at 17.5% but I haven’t accepted it yet. Do I pay the quoted amount or with VAT at 15%?
A: You can pay using the 15% VAT rate and we will re-check the amount paid to ensure it is correct when they are processing the acceptance. If you pay at the 17.5% VAT rate, we will refund you the 2.5% overpayment. You can calculate the new amount to pay using one of the formulae shown below:
(Gross amount ÷ 1.175) x 1.15
or
Net amount x 1.15
Q: I’m paying in arrears of the work being done and the work was completed before 1 December 2008 and invoiced within 14 days. Which rate applies?
A: In this case, the rate to be applied is the VAT rate in force at the time the invoice was issued. For example, if the work was completed on 17 November 2008 and the invoice is issued on 1 December 2008, then 15% VAT applies as the invoice is produced within 14 days of the work being done.
Q: I’m paying in arrears of the work being done and the work was completed before 1 December 2008 and invoiced more then 14 days after it was finished. Which rate applies?
A: In this case, the rate to be applied is the VAT rate in force at the time the work was completed, for example if the work was completed on 17 November 2008 and the invoice is issued on 2 December 2008, then 17.5% VAT applies as the invoice is produced after 14 days of the work being done.
Q: I’m paying in arrears of the work being done and the work was completed after 1 December 2008. Which rate applies?
A: In this case, the rate to be applied is the VAT rate in force at the time the work was completed; in any case as both the work completion date and invoice issue date are after 1 December 2008 then the 15% VAT rate applies.
Q: I’ve asked for a refund. Which rate of VAT applies to the refund?
A: The VAT we refund will be at the same rate as that on the original invoice.
