Many Limited company contractors unaware of New Year VAT changes
The majority of smaller sized business, such as Limited company contractors, are unaware of New Year VAT changes, reveals a recent survey.
Findings from KPMG have revealed that six in ten small businesses are unaware of the new VAT rules coming into place from 1st January 2015.
The radical reforms to European VAT rules will affect the supply of telecoms, broadcasting and electronic services. From January next year, VAT will no longer be charged and accounted for based on where the business supplier is established, but according to the EU country where the customer belongs.
Of those surveyed, 62% did not know about the new 2015 VAT rules, and 66% were not aware of the potential penalties associated with non-compliance.
As well as many smaller sized businesses being unaware of such changes, the survey also revealed that there was a ‘worrying lack of clarity on the potential costs associated with getting ready for the changes’.
Mike Camburn, Indirect Tax Partner at KPMG said, “Despite efforts by tax authorities and advisors to notify and educate businesses, with less than two months before implementation of the new rules, there remain a significant number of affected businesses that are not aware of the 2015 VAT changes.”
According to Amanda Tickel, the mechanics of how to comply with the new rules are extremely challenging. She explained, “The new VAT rules mean affected companies face an increased compliance burden and billing becomes more difficult to manage.
“In the first instance, businesses need to ensure their systems can capture the right sort of information to evidence where each customer lives and apply the correct VAT rate. Coupled with this, those affected urgently need to decide how they’ll report and pay the VAT.”
For further information on the new VAT rules, click here.
How could registering for the Flat Rate VAT Scheme benefit you? Read our plain English guide on the Flat Rate VAT Scheme.
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