Changes to VAT Rate
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As you are no doubt aware the rate of VAT and Insurance Premium Tax are both due to increase on 4th January 2011.
In relation to VAT the normal rule is that where an invoice is issued or payment received on or after 4th January 2011 VAT is due at 20% even if part of the supply was undertaken before that date. There are change of rate rules that may be applied but these are optional.
In relation to Insurance Premium Tax the standard rate of IPT will increase from 5% to 6%. Insurers have two ways of calculating what the relevant date is for calculation of IPT: -
- The cash receipt method, which uses the date when the insurer, or someone acting on their behalf, physically receives the premium payment; or
- The special accounting scheme or premium written method, which uses the date when the insurer records the premium as being due to them.
I would imagine that in relation to ATE premiums the first method will be the one that is used and so you may need to recalculate the premiums on policies which have already been issued but not yet paid.
The links below will take you to the HMRC and Law Society guidance on the changes and provide additional reference:
If you would like a word about this, or indeed about any other costs issue, please don't hesitate to contact me.
Andrew Neat
A Neat Legal Services
Law Costs Draftsmen and Costs Consultants.
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