20 November 2009
On 2 November, CGCoPE hosted a workshop for procurement professionals from across the sector. During this workshop delegates took part in a quick-win brainstorming session. It was suggested that there is an opportunity for the central government collaborative partners to benefit from the VAT reduction.
What is the VAT reduction?
In order to stimulate consumer spending the UK Government reduced the standard rate of VAT from 17.5% to 15% from 1st December 2008. The 15% rate will remain until 31st December 2009, and from 1st January 2010 it will revert to 17.5%.
The standard rate of VAT applies to many goods and services you buy in the UK, except for those that are:
zero-rated e.g. most foodstuffs; passenger transport (including air travel, domestic and international); children's clothes; and, books, newspapers and magazines.
reduced rate (at 5%) e.g. domestic fuel and power; or
not subject to VAT at all - e.g. education; health; financial services.
How does this affect me?
The reduction in the VAT rate should not be used to stockpile goods. However, CGCoPE would advise that where collaborative partners have planned purchases of high-value items early in the new year i.e. capital expenditure; where possible, the purchase should be made prior to 31st December 2009. This applies to standard rate VAT items only.
Go to the HM Revenue and Customs website for more information
Please advise CGCoPE of any savings made by benefitting from the VAT reduction.