CHANGE TO VAT RATE
You will all be aware that the Chancellor yesterday announced that the VAT rate is to change from 17.5% to 15% effective 1st December 2008.
What impact will this have on City Computer Systems Ltd?
From 1st December the VAT we charge on invoices will therefore decrease from 17.5% to 15%. This change will be made by our IT department to Oracle over the weekend and will apply automatically to all invoices raised from Monday 1st December.
As all our customers are VAT registered businesses the change in rate will have no impact on their own cost price.
Therefore the prices you quote to customers which exclude VAT should be the same both before and after the change in VAT rate.
All businesses that are VAT registered effectively collect VAT from the end consumer for the Revenue. The change in VAT rate does not impact the cost of goods to them.
For example if a customer buys goods from us this week that cost £200 excluding VAT they will be charged £200 + £35 (i.e. 17.5%) VAT. When the customer sells the goods after the change, lets say at cost price, they will sell them at £200 + £30 VAT (i.e. 15%). When completing the VAT return the reseller will pay over £30 VAT charged on the sale and receive back the £35 VAT paid to us, resulting in a net repayment of £5.
THEREFORE THERE IS NO CHANGE IN THE COST OF GOODS FOR OUR CUSTOMERS
Thanks
Ash
Sales Manager
City Computer Systems Ltd
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