Profession
The chancellor’s decision to reduce VAT payable by 2.1% in last week’s Pre-Budget Report could mean legal practices will have to make considerable changes to stay compliant.
Andy Harris of Hazelwoods LLP says: “As a solicitor, most supplies are covered by the normal tax point rules, that is, the date that determines which VAT rate is applicable.
“The tax point is the earlier date of completion of the work, the invoice date or the date payment is received.”
Harris says that for single supplies carried out over a period of time spanning the change in rate, for example the preparation of a will, the whole supply can be charged at the new rate, except where service was provided more than 14 days before you issue the invoice.
Harris says, however, that HM Revenue & Customs are offering a degree of fl exibility as firms come to terms with the changes. “They have announced they will be operating a ‘light touch’ in terms of errors made in the first VAT return after the change.
“If you discover any errors on a VAT return you can correct it in the normal way by making a voluntary disclosure or by correcting it on your
next return,” he adds.
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