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Friday 24th June 2011
The Emergency Budget report on 22 June 2010 confirmed that the UK VAT rate will increase to 20.0 per cent for any sales of standard-rated goods or services that you make on or after 4 January 2011.
Merchants who have a Streamline point of sale terminal accepting Visa Purchasing and MasterCard Card data will be affected.
We are pleased to inform you that if you are affected by the UK VAT rate increase, your Streamline terminal will automatically be updated with the new rate during December, in readiness for the change on 4 January 2011.
If your point of sale equipment is not supplied by us, please contact your supplier directly for more details.
We have outlined Frequently Asked Questions (FAQs) to answer your queries surrounding this VAT rate change.
We ask that you refer to these pages on a regular basis for any updates.
As this affects most merchants, we have produced a list of frequently asked questions to provide more information on this matter.
Why is the UK VAT rate changing?
The standard rate of UK VAT is increasing to 20.0% on 4 January 2011. This is one of the measures the UK Government is introducing to address the budget deficit.
When will this change come into effect?
The 20.0% VAT rate comes into effect on 4 January 2011. This follows the announcement in the Emergency Budget statement on 22 June 2010.
Will the terminal still work after the automatic update has taken place?
Yes, the terminal will continue to process transactions in exactly the same way as it always has.
How does the change in the VAT rate affect me?
Do I need to manually update my terminal with the new rate?
No, you are not required to take any action. The VAT rate of 20.0% will automatically be updated on to your terminal during December 2010, in readiness for the rate increase on 4 January 2011.
In order for this automatic update to take place, we ask that you ensure your terminal is switched on at all times and remains connected to a dedicated phone line.
If you currently have one of our older Dione Xchequer terminals we will contact you during December to arrange the installation of one of our new Gemalto X8 terminals. If you would prefer to have the replacement completed sooner then please call our Terminal Helpdesk on 08457 61 62 63, selecting Option 2.
Why should I keep my terminal switched on at all times?
This is extremely important as Streamline may load latest software or relevant changes via your telephone line outside your trading hours. The telephone line should also be dedicated to the terminal and NOT shared with other terminals/computers or fax equipment.
Do I need to process transactions differently after the automatic update?
No. You will simply need to select the rate of VAT which applies. For transition period (around three months) both the current 17.5% and the new 20.0% rate will be included.
I use point of sale equipment that is not supplied by Streamline, what do I need to do?
You must contact the supplier of your point of sale solution directly for advice on how to change the VAT rate to reflect 20.0%. All software suppliers who provide solutions for capturing and passing VAT enhanced data for Visa Purchasing and MasterCard Card have been reminded of the VAT rate change by Streamline.
When you accept purchasing/commercial cards, enhanced data is the additional information that you can capture when using a Gemalto X8 terminal. It includes things like VAT, customer invoice numbers, commodity codes etc.
What changes will be seen on my invoices?
For invoices received by merchants with Streamline terminals, you will see the change in rate shown under the 'VAT analysis' section on the first page of your invoice received at the beginning of February 2011.
How do you turn off/skip the VAT data when processing a purchasing card transaction?
If you have a Gemalto X8 terminal the VAT data is part of the terminal functionality. If you no longer wish to capture this 'enhanced data' you should switch to a standard terminal type by calling our Terminal Helpdesk on 08457 616263, selecting Option 2.
What will happen if the automatic update does not take place on my Bank supplied terminal?
The terminal will continue to take card transactions normally. However if you accept a purchasing card, it will only allow you to process at 17.5% VAT. From the 4 January 2011 this is an incorrect VAT rate for new Purchasing Card transactions.
If an automatic update has not taken place by 3 January 2011, either call our Terminal Helpdesk on 08457 616263, selecting Option 2, or complete the following steps to force your Gemalto X8 terminal to dial out and collect appropriate software update:
Once complete you can recommence use of your terminal as usual.
Please note that you are solely responsible for the correct accounting of VAT - not Streamline, or the cardholders.
A purchasing card is a Visa or MasterCard credit card, used by government and corporate company staff to purchase on behalf of their employer.
The card looks the same as all other credit cards, although some may have 'purchasing card' written on them. If you take payment over the phone, the terminal knows the card is a purchasing card by the first six numbers on the card, and will add VAT data automatically.
The card is capable of collecting more information than the standard sale amount including VAT detail, if any, and customer reference numbers. Companies use this information to track the spending of staff, and use the electronic reports delivered via the terminal to claim VAT without the need for paperwork.
I don't take purchasing card transactions, why do automatic updates still need to take place?
You may have this machine for different reasons, other than for enhanced data. If you have a Streamline terminal, your machine will periodically receive updates of software to ensure that you and your customers are best protected. Provided your terminal is switched on and remains connected to a direct phone line at all times, then such updates happen automatically.
I do not want this machine anymore, but still want to use the Streamline Merchant account to accept normal cards.
If you have an account manager, please discuss alternative solutions, so they can ensure you have no purchasing card customers that may be affected. Otherwise please contact our helpdesk on 08457 61 62 63.
What if I have customer invoices or credit notes dated pre 3 January 2011 that are 17.5% VAT rated?
You will need to get advice from a tax professional, but based on that advice you may be able to submit a refund transaction and by doing so, select the correct rate of VAT due. Any invoice issued with a date of 4 January 2011 onward must include the new VAT rate, regardless of the period in which the product or service was provided.
Please note the information below is for guidance only and is not intended to replace professional advice. We recommend that you consult with your local VAT office, HM Revenue & Customs website, tax or legal advisor before changing your purchasing card processing procedures. At all times, you will be responsible for ensuring that VAT is properly brought to account, where applicable, on supplies made to your customers.
All Purchasing Card Payments must be processed at the New VAT rate from 4 January 2011
Any invoice issued with a date of 4 January 2011 onward must include the new VAT rate, regardless of the period in which the product or service was provided. Any invoice paid by Visa Purchasing Card using VAT-capable software or terminal facilities, should be charged at the VAT rate applicable on the day of transaction processing.
Please review the Purchasing Card VAT guidance detailed below:
The tax point is the transaction date as shown on the VAT reports produced by the (Card) Issuing Bank. This is the time your transaction, following authorisation, is passed for clearance and settlement. This is therefore the date on which you must account for the VAT to the Revenue Commission.
You must not mail a conventional tax invoice to your customer. However, the Revenue Commission may request a conventional tax invoice for inspection in order to check your VAT accounting records. You will therefore, need to be able to produce a tax invoice upon request.
If your customer requests a conventional tax invoice, the invoice must be endorsed 'Paid by Purchasing Card - Supplementary VAT Invoice'
If your customer decides to pay using a purchasing card after you have issued a conventional tax invoice, you must issue a credit note to cancel the original transaction (and send this document to your customer) before processing the payment as a Purchasing Card Transaction.
VAT guidance contained in this correspondence is distributed on the express understanding that while the information is believed to be reliable, it has not been independently verified by us. We make no representation or warranty (express or implied) of any nature, nor do we accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information on this document. This shall not, however, restrict or exclude or limit any duty or liability to a person under any applicable laws or regulations of any jurisdiction, which may not lawfully be disclaimed.
Notes to editors:
Streamline is the UK’s leading card payment acquiring business which allows customers to accept card payments at point of sale, over the phone and the internet. The company offers services across the entire payment value chain, including transaction capturing, merchant acquiring and transaction processing.
Clients vary in size from small family run companies to large multi-national corporations, spanning a broad spectrum of industries and sectors.
Streamline is part of the WorldPay group of companies; one of the top five global players in card processing.
