Tax Plus Blog - VAT

The main changes announced today are: As expected the standard rate of VAT will increase to 20% on 4 January 2011. Anti-forestalling legislation has been announced to prevent any widescale planning. There are no changes to the current zero rates. The flat rate scheme percentages will be increased in line with the increase to the standard rate of VAT. The standard rate of Insurance Premium Tax will increase by 1% to 6%. The higher rate will increase by 2.5% to 20%. Previously announced changes to the zero rating of certain types of aircraft. Previously announced changes to the place of supply of certain types of natural gas...

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HMRC has announced an important change to the treatment of cheques sent by taxpayers to pay VAT due on their VAT returns. From 1 April 2010, payment will be treated as being ‘received’ by HMRC when the cheque clears into HMRC’s bank account and not as currently, the date the cheque is received. A cheque takes three bank working days to clear (excluding weekends and bank holidays). Businesses paying by cheque must ensure that they allow enough time for the cheque to be received and cleared by the due date of the VAT return. HMRC recommends that businesses...

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The Government’s new temporary scheme introduced on 18 May 2009, to boost the flagging new car market has brought with it a number of potential VAT issues for manufacturers, dealers and customers alike. As the amount is funded in two ways, half from the manufacturer and half from the Government, there is scope for VAT accounting errors to occur, particularly as many car dealers are using this scheme in conjunction with other promotional schemes. HMRC’s Business Brief 31/09 sets out the correct VAT treatment of the £2,000 subsidy. If you buy a new car or van under this...

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It was a fairly uneventful VAT budget. The Chancellor confirmed that the standard rate of VAT will revert back to 17.5% on 1 January 2010 as previously announced. Draft “anti forestalling” legislation has already been published and will be introduced in the Finance Act 2009 to prevent certain exempt businesses from planning to benefit from the rate increase. There was speculation beforehand that the standard rate of VAT would increase to at least 18.5% and/or that the Chancellor would make use of new powers to extend the reduced rates of VAT but neither of these has happened. Other VAT changes announced...

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As widely reported, the PBR today has confirmed that the standard rate of VAT will be cut to 15% with effect from 1 December 2008. (The new VAT fraction to be applied to VAT inclusive prices will be 3/23). This means that standard rated supplies of goods and services made after this date will attract the new rate of VAT. Supplies at the zero or reduced rates and exempt supplies are not affected. The new rate will remain in place for 13 months till 1 January 2010, when it will rise again to 17.5%. (Anti- forestalling legislation will be brought in to prevent planning around the subsequent rate...

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Please find below a blog which you might find of interest from my colleague Cathy Corns, who writes for our sister blog SME Plus... HMRC has published new guidance on the new penalty provisions that will apply from April 2008. HMRC states that it has designed the new penalties so that: If people take reasonable care when completing their returns they will not be penalised. If they do not take reasonable care errors will be penalised, and the penalties will be higher if the error is deliberate. Disclosing errors before HMRC find them will substantially reduce any penalty due. The...

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The main VAT changes announced in the Budget today are; With effect from 1 April 2008, the annual VAT Registration/deregistration limits have increased to £67,000/£65,000 respectively.  Revised fuel scale charges will apply for VAT return periods beginning after 1 May 2008. A transitional period has been announced for VAT refund claims to 31 March 2009. This follows recent litigation relating to the three year capping rules introduced in 1996/7. Withdrawal of the staff hire concession with effect from 1 April 2009. A package of simplification measures for the option to tax. Extension of the VAT exemption for fund management services. The limits for correcting...

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My colleague Cathy Corns recently outlined the new penalty regime for both direct and indirect taxes to be introduced next year. This new regime will potentially mean that businesses will face higher penalties for errors in VAT return periods with a due date after 1 April 2009. Under the current VAT rules, if a business discovers an error before HMRC has begun to make enquiries, it can either make a voluntary disclosure or where the VAT is less than £2,000, it can adjust the amount on the VAT return. By doing so, the 15% misdeclaration penalty (triggered when an error breaches certain thresholds)...

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HMRC have now issued Business Brief 07/2008 inviting businesses to submit claims for both input tax accrued before 1 May 1997 and also output tax claims for accounting periods prior to 4 December 1996. There is no time limit for submission of these claims but if you have a claim, prompt action should be taken. Further announcements are expected. ...

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If you are involved in providing cross border services, you may be affected by future changes to the place of supply rules under a “VAT package” agreed by the European Commission in December 2007. Broadly the new rules (to take effect from 2010) will change the place of supply of “business to business” services to the place where the customer is situated. Supplies of services to consumers will continue to be where the supplier is established. However, there will be special rules (“one stop shop”) for telecoms, broadcasting and electronic services to consumers (delayed until 2015). The...

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