Pre-Budget Report 24th November 2008 - VAT reduced to 15%

The intense speculation in the press over the weekend has been confirmed, and the Chancellor has, this afternoon, announced a reduction in the rate of VAT to 15%. There is some relief that the change is not immediate, but will take effect next Monday, 1st December and is due to last until 31st December 2009, reverting back to 17.5% on 1st January 2010.

As it is more than 17 years since the last change of rate LAVAT has produced a Brief, in Question and Answer format, which we hope will assist you with the implementation and implications of the change.

In addition, we would recommend that your colleagues in IT should be involved in ensuring appropriate changes in the rate and validation criteria – both creditor and debtor systems – and all local authority departments should be notified of the change by e-mail and other communication.

The Chancellor has also announced the introduction of anti-avoidance legislation to prevent the creation of artificial arrangements to avoid the return of the VAT rate to 17.5% Further details will be announced in due course.