Ray Long, principle of Northwood accountants Munday Long and Co said “With the government making little secret that it sees a package of fiscal measures as essential to reversing the slowdown in the economy, it is no surprise that this reduction has been introduced or that it takes effect as from 1 December and will remain in place until 31 December 2009 when it reverts to the old rate.”

The government’s hope is that the temporary cut will encourage consumers to loosen purse strings and the Chancellor expressed the wish that retailers pass on the savings to shoppers as quickly as possible. However there are a number of considerations for business owners to address immediately in the run up to 1 December.

“Businesses not only need to ensure that their accounting systems are changed to reflect the new rate of VAT now and again in December of next year. They also need to ensure that all business and system processes such as quotations and pre-billing of work to be carried out post 1 December in 2008 and 2009 are all addressed correctly” added Ray.

If you have any questions or concerns about how the changes in the VAT rate will impact on your accounting and business systems, please contact Munday Long & Co on 01923 82 00 88 or visit our website.