There is an opportunity for businesses who make a continuous supply of services to charge the first 6 months of their services in 2010 at 15%. This will benefit customers who are not VAT-registered and, hopefully, generate significant customer goodwill for the supplier.
Firstly, a tax invoice for the next 6 months supply of services must be sent to the customer with a tax point of 31st December, 2009 or earlier. This is vital. This should be the only VAT invoice in respect of these services.
Businesses must not be connected and the amount involved must not exceed £100,000.
For businesses using the cash-accounting method, there will be no drawback to raisng 6 months invoices in one go. However, businesses accounting under the standard VAT scheme will end up paying the VAT to HMRC at an earlier date.
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