The VAT rate reverts to 17.5% on January 1st 2010. Details of the rules relating to the changes can be found on all 45 pages of the HMRC guidance at:

www.hmrc.gov.uk/vat/forms-rates/rates/rate-rise-guidance.pdf

For most traders the change will not be complicated – but there are special provisions
for situations such as:

1. Continuous services

2. Deposits

All registered traders should review the guidance and if specific assistance is required please call with your enquiries

A number of issues have caught my attention over the last few months relating to where VAT should be charged.

1. Intercompany charges: Where management charges are levied between businesses – these generally should be VATable where the seller is VAT registered. Sometime where the seller is exempt or not registered – the addition of a taxable supply like management charges can mean that they should be registered – care needs to be taken.

2. Disbursements – the general rule is that where expenses are recharged to customers – irrespective of whether the original cost incurred VAT (such as travel) the recharge should carry VAT. There are exceptions - but that is the basic rule.

3. Recharging employment costs – likewise, generally if recharges of salaries etc are made – VAT should be charged. Again, there are many exceptions but this is the general rule.

4. In 2010 the rules will be changing in relation to some services sold and purchased within the EU and the regulations as to how VAT should be charged will be amended. If you do buy and sell services now is the time to consider whether the changes will have an impact on your business and you should consider the impact of these changes now.

VAT was meant to be an easy to understand tax – it is probably the most complicated of all the taxes when it comes to dealing with everyday matters and very often the common sense answer is far from the legal requirement. Always ask a question when something out of the ordinary occurs – never assume. I am of course happy to answer your questions.

Impact of the new higher rate tax:

The new 50% rate comes into force from April 2010 – taxpayers may therefore want to accelerate income into the current tax year to cap the tax rate at 40%. As a further consequence – the higher rate on income tax will make capital gains tax look more attractive and therefore taxpayers should be enquiring as to methods of generating capital rather than income. Likewise, the benefit of Gift Aid payments to higher rate tax payers becomes more interesting.

Changes to the tax benefit of pension contribution:

Pension contributions are being restricted and so taxpayers who are keen to use pension plans for financial planning should assess their needs now.

Tax deductions for buying equipment: If you are planning to buy capital assets for your business – then with the new enhanced rates of tax deductions available on this expenditure – advice should be sort on how to maximise the advantage.

On your quest to find a bookkeeper, you shall come across different means that shall seem equally enticing and fruitful, but not all of them shall assure you about hiring the best bookkeeper for your business. Whats then, the deal?

First, lets see why you need a bookkeeper. Its vital to keep track of the financial data of every business; the taxman doesnt like us leaving the details to chance. Thus, someone is needed to be in charge of the books dedicatedly; this person, unless with sufficient amounts of training and experience, shall not be able to get the job done properly. However, that way we are talking about the bookkeeper perse; finding whom can be quite a bit of a challenge. Therefore, knowing what to look for among the prospective candidates is paramount.

I remember an accountant in Chicago telling me: Accounting is not about mere figures; its the art of analyzing and interpreting data to make it respond correctly. The above statement is enough to make a person catch the idea what an average accountant in Chicago means; however, there are different types of accounting services that Chicago accounting firms and individual accountants provide.

Industrial Accounting: These are limited only to single firms and an accountant works under a single employer in return for a fixed salary.