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Rate of VAT for boat licence

Are there any rules about post dates and payment by cheque for a licence which runs from the 1st January, what should the prevailing rate be?

In this case a cheque was posted on the 30th December, with a witness, though no proof of posting, yet I have a balance owing on the difference between the rates of VAT, such that the cost is based on the current rate.

I thought where payment was before the cut-off date, the receipt of a cheque was deemed to be date of payment (in my days of VAT cash counting), then the rate of VAT would be that prevailing on the date of the receipt of the cheque.

I also thought that items were deemed to be delivered the day after posting, or is that only in favour of government departments?

Reply to
Fredxx
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There are rules at HMRC website and there are some ifs but in general, the earlier of the two dates either the supply goods/services or payment determines when the contract took place. In the event of payment (or part payment) the VAT is based on the actual amount paid therefore the balance (if any) will be at the new rate. However they do have a right to charge you the new standard rate.

Reply to
Richard McKenzie

Did you make a voluntary payment in advance of being invoiced, or was your payment made as a result of you having been given an invoice? What is the invoice date?

I think that's correct. More generally, the date which determines the VAT rate is the earliest of three:

1) When the supply is actually made, 2) The invoice date, 3) When payment was received.

If payment was not received until 4th January or later (which does seem likely), then that's too bad, but it may not matter.

It seems highly likely that an invoice for a licence which runs from 1st January would be issued well before 1st January.

Even if the licensing authority were to invoice late, i.e. on or after

4th January, I would think that actual supply of a licence running from 1st January would be deemed to have been made on 1st January, and the old rate still applied on that day.

So I think that at least (1), and probably (2) would be prior to 4th January, even if (3) isn't. Therefore the old rate should apply.

I reckon it's actual, not deemed, receipt which is relevant. There may also be a question mark in the case of cheques, whether "payment received" means the cheque being in the hands of the recipient, or it having been paid into the bank, or has been cleared.

Reply to
Ronald Raygun

That is too simple.

Depending on the type pf licence, it could be 17.5% or 20%, or an apportioned amount which would be very close to 20%..

If and only if they are using cash accounting, although even then I'm not sure that is true any more.

Normally the tax point is the date of provision of the goods/services, although in some cases it can be the date the invoice is raised (if later).

For ongoing services, the rate can sometimes be apportioned over the period of the service, so if that was an annual licence, it would be 3 days at 17.5%, and 362 days at 20%.

They are deemed to be delivered on the 2nd *working* day after posting, so if you posted on the 30th, it would be deemed to have been delivered on the 4th..

Reply to
Alex Heney

There are rules at HMRC website and there are some ifs but in general, the earlier of the two dates either the supply goods/services or payment determines when the contract took place. In the event of payment (or part payment) the VAT is based on the actual amount paid therefore the balance (if any) will be at the new rate. However they do have a right to charge you the new standard rate.

Not for a supply on 1/1/11 - rate did not come in until 4/1/11.

BTW it is the supply date (usually also the invoice date) NOT the payment date that set the rate.

Reply to
R. Mark Clayton

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