The standard rate of VAT in the
UK is being changed under the government’s emergency plans to
relieve the economic recession.
The rate went down from 17.5 to 15
percent on December 1 2008, and will return to the original rate at
the end of 2009.
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The main impact on asset finance will
consist of administrative problems on lease rental invoices.
Prior to this year, the standard VAT
rate had not changed since 1991 and had never been reduced since
1974. VAT experts said that lessees might seek to delay payments
based on arguments over whether they should pay the 15 percent or
the old 17.5 percent VAT rate.
Invigors partner George Tonks said:
“Where each rental is separately invoiced, the ‘tax point’ [the
relevant date for VAT] will be the invoice date. So a rental due in
December could sill carry 17.5 percent VAT if invoiced before 1
December. This gives some scope for a lessee to delay payment while
the VAT rate is discussed with the lessor.”
The rules are different in cases where
lessors issue annual schedules in advance for the monthly or
quarterly rentals.
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By GlobalData“In this case the tax point is the due
date for payment. So schedules covering the current period will
need to be reissued with revised details of the periodic VAT
rates,” added Tonks.
