All small businesses must be prepared for changes that will be implemented at the start of next year, such as VAT reverting to 17.5% on January the 1st and the tax deadline at the end of the first month of 2010. The Institute of Chartered Accountants have compiled some advice so how all small businesses can ensure they are ready when the changes occur.

 

VAT rate increase on 1 January 2010

The standard rate of VAT, which fell temporarily to 15% last year, is due to go back up to 17.5% on 1 January 2010. HMRC recognises that the change may cause problems and has put measures in place. These include a ‘light touch' to be operated by HMRC audit staff in dealing with errors, arising out of the rate change.

 

• If there is an overlap of goods and/or services around 31 December, the VAT charge can be split on a fair and reasonable basis so that 15% tax is charged on work carried out before 31 December 2009 and 17.5% on work carried out after this date.

• Don't forget that any credit note or refund given to a customer is based on the same rate of VAT that was charged on the original sale. The same principle applies to VAT claimed on bad debts.

• Start preparing as much as possible for the rate change. Are the relevant employees in accounts going to be available at the beginning of January? Are there any jobs that will cross over the two rate period?

"Many SMEs have already had a tough year. For a number of them a combination of factors in January means it could be the final straw. There are however a number of practical steps that businesses can take to ensure that they make it through the winter and face the new season on a positive note," said Clive Lewis, Head of Enterprise at the ICAEW.

Tax deadline - 31 January 2010
If you're self-employed, have relatively simple tax affairs and your annual business turnover was below £67,000, you can use the short version of the self-employment supplementary pages when filing a tax return. If however you have more complex tax affairs and your annual business turnover was £67,000 or more, remember to use the full version of the self-employment supplementary page when filing a tax return.

• Remember that the deadline is 31 January 2010 and you will now have to do the self-assessment form online to avoid a penalty.

• Try to complete the form as early as possible to avoid stress and missing the deadline.

• If you expect to miss a tax deadline make sure you contact the authority concerned immediately. You may be able to get more time to pay or to make ad hoc or monthly payments.

For further information please visit www.icaew.com/enterprise [1]