IT Contractor Tax - Accountants for Contractors

Any contractors registered for VAT should be aware of a number of changes to the VAT system, which take effect from 1st April 2010.

VAT changes from 1st April 2010

1. Any VAT-registered contractors with turnovers of £100,000 or more (excl. VAT) will need to submit their VAT returns online, and also pay their VAT liabilities electronically.

2. Any new businesses registering for VAT from 1st April will automatically need to deal with VAT electronically from the start, regardless of turnover.

3. All VAT cheque payments sent via post are only deemed to be 'received' by HMRC once cleared funds reach HMRC's bank account, rather than the date with the cheque was actually received. Businesses are therefore urged to allow enough time for cheque payments to reach HMRC, or late payment surcharges may be applied.

4. Any business or person issuing a VAT-inclusive invoice, when they are not entitled to charge VAT, will be subject to a new VAT 'wrongdoing penalty', which will be a percentage of the unlawfully charged amount of VAT on the invoice.

5. The VAT registration threshold rises from £68,000 to £70,000 from 1st April 2010. The de-registration limit rises to £68,000.

You can register to file your VAT returns online here, or your accountant may do this on your behalf, so check first.