With the return to the 17.5% rate of VAT on 1 January 2010 HMRC have issued brief 68/09 which explains how the return is to be implemented. It also includes details of the consultation currently being carried out by the Department for Business, Innovation and Skills (BIS) about a proposal to amend the Price marking Order 2004.
Among the measures mentioned in the brief are the special accounting arrangements for businesses operating beyond midnight on 31 December 2009. The measures are aimed in particular at businesses operating after midnight for example pubs, clubs, restaurants and hotels. As it is not practical for such businesses to adjust their tills at midnight HMRC will allow them to account for VAT at 15% on takings received up to the earlier of the end of trading of the 31 December session or 6am on the morning of 1 January 2010. Certain conditions apply.
The brief also comments on the approach that will be taken by HMRC VAT audit staff if they discover errors in relation to the rate change. Guidance has been given to the staff to operate a 'light touch' in terms of errors made in the first VAT return after the change where the error relates to a change issue.
Full details are available here