The government’s plan to increase the VAT rate back to itsoriginal 17.5% is likely to play out as planned.

For contractors in the UK, this means they (or their LimitedCompanies), will have to revert back to charging their clients 17.5% VATinstead of the current discounted rate of 15%. For contractors in the UK takingadvantage for the Flat Rate VAT scheme, this will be a welcome change.

Many companies, particularly those on the high street, areunhappy with this proposal as the increase is due to take place from midnighton 31 December 2009. This is traditionally a very busy time for many retailers withthe Christmas shopping and bumper sales season at its peak. Making the changeat such a critical time for retailers is an enormous exercise.

The British Retail Consortium (BRC) is putting pressure onthe government to push this date back to the end of January 2010.

Read more about the changes on HMRC’s website at http://www.hmrc.gov.uk/pbr2008/measure1.htm