There is much confusion and many questions. The following is a mid-technical summary of some of the major issues, for those who need to know more. This relates only to supplies within the UK. International traders will be affected to a far lesser extent, as much is zero-rated or will have a "VAT neutral" result. 1. BACKGROUND 1.1 Customers who cannot recover the VAT charged to them (e.g. private individuals such as retail customers, or VAT exempt traders such as banks/insurers) will want as many as possible of their purchases to be invoiced at 15%, as VAT is part of their costs. 1.2 For businesses making supplies to these customers, there will have to be changes in the systems that record the VAT on supplies, with HMRC suggesting manual amendments where the systems cannot be adapted in time. 1.3 For such suppliers, there will also have to be a close examination of Tax Points (i.e. when a supply is deemed to have been made for VAT purposes). Although anti-avoidance legislation will prevent abuse of the temporary 15% VAT rate, HMRC has already stated that some special schemes will be permitted. 2. TAX POINT ISSUES & SPECIAL SCHEMES 2.1 The Tax Point is the date on which a supply is deemed to have taken place for VAT purposes. The Tax Point is the earlier of payment, or delivery (goods)/performance (services). However, if the invoice date is within 14 days of this, or if the invoice date is earlier than this, then the invoice date is the Tax Point. 2.2 Suppliers who make a supply (of goods or services) in the pre-15%-period, but deliver the goods or perform the services during the 15%-period, would usually still have to charge VAT at 17.5%. But now HMRC will permit the sale to be supplied at the 15% VAT rate. This is optional and is the suppliers choice. Supplies delivered/performed during the pre-15% period will remain charged to VAT at 17.5%; but pre-15%-period deposits can be re-invoiced at the 15% VAT rate (see 3. below). 2.3 Continuous supplies (e.g. a contract for marketing services) paid for during the pre-15%-period, but continuing into the 15%-period, would usually still have been charged to VAT at 17.5%. But now HMRC will permit the supplier to charge only 15% VAT on the supplies made during the 15%-period (though supplies made pre-15%-period will remain charged to VAT at 17.5%). This is optional and is the suppliers choice. 2.4 Continuous supplies invoiced in advance during the pre-15%-period, but giving some payment due dates during the 15%-period, must be amended for the lower VAT rate on any payments due during the 15%-period. 2.5 Businesses using the Cash Accounting Scheme should also be careful to identify the correct Tax Point. For example, if the funds received/paid in the 15%-period relate to a transaction with a Tax Point in the pre-15%-period, then the VAT to calculate is 17.5% (7/47) rather than 15% (3/23). 2.6 Suppliers issuing a sales invoice in the 15%-period for a supply whose Tax Point is in the pre-15%-period must charge VAT charge at 17.5%. 3. AMENDING ERRORS 3.1 For all adjustments to the VAT charged on a supply as a result of the temporary change in VAT rate, HMRC has stated that a credit note is to be issued for the VAT difference (e.g. 2.5% of the net value). Such credit notes must be issued within 45 days of 1 December 2008 (i.e. by 14 January 2009). 3.2 HMRC has stated that they will regulate the change with a light touch, in the event they find errors in a business VAT records connected with the temporary change in VAT rates. But HMRC has stated that it will still assess for any lost VAT.