VAT-man’s round of drinks on New Year’s Eve

Government tax inspectors are to pass on a late Christmas present to party goers allowing pubs and clubs open on New Year’s Eve to delay the increase in the rate of VAT from 15 per cent back to 17.5 per cent.

Alastair Darling reduced the rate of VAT to 15 per cent in the 2008 Pre-Budget Report to try and stimulate a flagging UK economy, with the rate to revert back to 17.5 per cent at midnight on the 31 December 2009. Pubs and clubs open on New Year’s Eve will be able to delay this change until the small hours of 1 January 2010.

Terry Dockley, a VAT specialist at accountants and business advisers James Cowper, said: “The government, already unpopular with voters, would have faced a riot if drinkers queuing at 11.59pm and not served until 12.02am were to be charged extra, not to mention the logistical nightmare for landlords of having to change tax rates in the middle of what is the biggest party night in the UK.

“It is not often the tax man gives something away for absolutely nothing, but this time it does seem that drinks really are on the government.”

Terry Dockley, VAT Director, James Cowper LLP, Tel: 01635 35255 or email: tdockley@jamescowper.co.uk

11.06.2009