You may have seen recently that a several EU countries have reduced VAT rates in an attempt to stimulate their economies. The theory is that if VAT is reduced, prices should fall which will encourage consumers to spend more.
Several experts and commentators have speculated that Rishi Sunak may announce similar plans for a reduction to VAT in the UK.
This is just speculation at the moment, however, if this does happen, any reduction will almost undoubtedly be for a limited period – the cost of this in terms of tax revenue would be considerable.
If you’re already using our preferred cloud accounting software XERO, any changes to VAT should be quite quick to implement, however, if you would like help planning for this eventuality, please get in touch.