IRIS, the UK’s largest privately owned software business, today announced the launch of IRIS Exchequer v6.2 and warned that many businesses may miss a significant change in VAT regulations.
Paul Sparkes, Product Director at IRIS Accounting and Business Solutions, predicts a problem for exporters; “HMRC announced changes to the rules determining the place of supply of services. They come into effect 1st January and mark an important change to the way exporters handle and report VAT for transactions across EU borders. However, we think many domestic organisations will be blind-sided by the increase in the UK standard rate of VAT. We are confident our customer base has put plans in place for the changes, but we are alarmed by how many non-IRIS customers we have spoken to who are not aware of the changes.”
The changes to which Mr Sparkes refers affect all businesses exporting goods or services to EU countries. HMRC introduced the rule changes in an attempt to simplify VAT reporting. However, without appropriate changes to accounting software to handle the new EC Sales List rules and Reverse Charging of VAT on purchases (introduced at the same time), businesses will face problems with reporting. Paper based VAT reporting requires that an EC Sales List must be submitted within 14 days of the close of the period, and electronic submission within 21 days. Because an HMRC defined threshold means some businesses need to report monthly, changes need to be implemented by the end of January 2010.
The new version of IRIS Exchequer, v6.2, has capability to report under the old rules AND the new, plus ad hoc reports over any date range for reconciliation purposes. It also incorporates reverse charge VAT handling for purchased services compliant with the new regulations.
Paul Sparkes continued; “We have been making customers aware of the upcoming change since early summer and made our latest version available in October to accommodate the changes. Most of our customers have upgraded to IRIS Exchequer v6.2 or have made plans to do so, but we're quite concerned about the number of non-IRIS customers we've spoken to who don't seem to have worked out how they will accommodate the changes.”
To help IRIS Exchequer customers implement these changes and the UK Standard VAT rate change (form 15% to 17.5%) IRIS will be communicating with customers and resellers during December on the changes that they will need to apply their to IRIS Exchequer systems.
Mr Sparkes concluded; “I am very comfortable with the arrangements we’ve made for our customers over the rate changes and the export reporting changes, and I am confident that IRIS Exchequer v6.2 users will be well equipped to handle the changes. I’m less sure that users of other systems will be as well catered for.”
More information on the changes in VAT handling for exporters can be found at these sites:
http://www.hmrc.gov.uk/budget2009/vat-changes.htm
http://www.hmrc.gov.uk/vat/cross-border-changes-2010.htm
http://www.hmrc.gov.uk/vat/managing/international/esl/reporting-esl.htm
