- Use the Standard VAT of 20% for 4 January, 2010
Updating your company file to use the Standard VAT of 20% for 4th January, 2011
In his 2010 Emergency Budget, the Chancellor announced an increase in the Standard Rate VAT from 17.5% to 20% effective 4th January 2011. For more details regarding the Standard Rate VAT changes, please visit the HMRC Web site.
To determine which Standard Rate VAT you need to use for transactions that span 4th January, 2011, please refer to the HMRC detailed VAT Guidance. If you are still unsure of the rate to use, please contact the HMRC National Advice Service at (0845 010 9000).
The steps you need to follow to update your VAT code depends on many things. Please review the following information to determine which instructions apply to your specific situation.
Please download the applicable guide which gives detailed instructions on how to implement the new 20% Standard Rate VAT in QuickBooks 2010. Click the link below to open the pdf.
Pro & Premier
QuickBooks 2010 - Get Ready for the VAT Change 04 Jan 2011.pdf
For SimpleStart
QuickBooks 2010 SimpleStart - Get Ready for the VAT Change 04 Jan 2011.pdf
Below are two options you can choose from to make the necessary changes to your VAT.
Note: If you are using QuickBooks SimpleStart, you can only choose option 2.
Option 1: Create a new Standard Rate VAT code.
This option is not applicable to SimpleStart.
Here are the pros and cons of this option.
| Positives | Negatives |
| Preferred HMRC solution | For versions prior to Quickbooks 2010, this is a time consuming process – the time required to complete these steps may exceed a full working day. (QuickBooks 2010 has reduced the time by up to 90%) |
| Manual VAT calculations will not be required when editing transactions created before 4 January, 2011 using 17.5% Standard Rate VAT | Setting up new VAT codes is a complex process - the instructions provided must be followed without error |
| Best solution for VAT reporting and audit purposes | Requires a good knowledge of VAT reporting to check the new VAT codes have been set up correctly |
| Not applicable to SimpleStart |
Option 2: Edit your existing Standard Rate VAT code.
Here are the pros and cons of this option.
| Positives | Negatives |
| Quick – the time required to implement this solution is expected to be less than 30 minutes | Not the preferred solution of HMRC |
| VAT reports will be correct (if applicable, manual calculations on transactions have been completed) | Relies on employee vigilance when entering and modifying transactions to ensure that the correct VAT % has been calculated (manual VAT calculation may have to be performed when entering transactions) |
| Audit possible but relies on use of VAT code description to identify % rate used in the calculation shown on the Audit Trail report | Requires a good knowledge of VAT reporting to check the new VAT codes have been set up correctly |
| Applicable to SimpleStart | The VAT summary on the invoice displays the % set up in the VAT code (this will display at 17.5% for current and historical invoices) |
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