What's new

The LSC confirms that:

• all cases concluded before 1st December will attract a VAT rate of 17.5%
• all cases concluding on or after 1st December will attract a VAT rate of 15%.

We are making the necessary adjustments to our systems.

HMRC guidance

We have reviewed the guidance issued by HM Revenue and Customs for applying the latest change to the VAT rate from 17.5% to 15% effective from 1 December 2008.

The LSC makes payments to providers using a range of fixed fee and non-fixed fee charging schemes that do not easily adhere to a usual VAT business-invoicing model with both paper claim forms and online claims.

We would also remind providers that they are responsible for their VAT accounting and recommend they discuss these changes to VAT rates with their local VAT office.  In particular providers may have particular agreements with their local VAT office.

The guidance states...

The HMRC guidance explains that "the basic tax point is the date when the service is performed (normally taken as the date when all work except invoicing is completed)".

The LSC approach is:

• All claims for work with a case concluded date before 1st December will attract a 17.5% VAT rate.
• All claims for work with a case concluded date on or after 1st December will attract a 15% VAT rate.

This will include all claims and claim forms, and all areas of LSC funded work. We will be confirming this to HMRC.

From 1st December there will be a short period whilst work which concluded in November is billed, but shortly thereafter VAT at 15% will become the norm.

We will produce a more detailed note in the next few days.