Budget 2011
As ever, the world of VAT toodles along, with few highlights, so it is difficult to get excited about the things that are changing. But let's not start on a negative - here's a few goodies for you:
VAT registration limit (previously £70k) going up to £73k. [They call it "revalorisation" of the threshold - what is that all about?] This will apply from 1 April 2011.
De-registration limit going up to £71k, from £68k, again effective on 1 April.
There is one interesting change though - the "low value consignment relief" being reduced from £18 to £15. For those who don't know what this is, it is the value of individual deliveries coming into the UK that slip past HM Customs intact, with no duty or VAT being charged. This is what allows you to get cheap CDs, flowers, vitamins etc. from the Channel Islands - as it would have cost more to collect the taxes than HMRC would gain from collecting them. I don't know that this will stop the trade, but there you go.
Fuel scale charges will rise as they usually do - from
VAT periods commencing after 1 May 2011.
I would have to express surprise at mention of the wacky "Online Registration Wizard", which I believe is a posh way of saying that if you register for VAT, you must do it online. Why do they think it is better to dress it up in this way?
And I've just noticed a really cheesy mention of a plan which will "....accelerate the move of customers to access services through efficient online channels." Of course it will, especially if you make it sound as if it is of benefit to the 'customer'.
Furthermore, they are planning for everyone to do online VAT returns as well - those who have escaped thus far will be forced into it from 1 April 2012.
And finally, further down the page, there is a bit of slush about how HMRC are improving things, in which they mention "operational grit". That's what is called an error, in the real world..
Budget 2010 – VAT changes
As ever, the Budget didn’t appear too interesting in terms of VAT changes. Indeed I came across a headline indicating that there would be no changes to VAT.
Look a bit further though, and there were quite a few changes, although admittedly nothing to get anybody terribly worked up about.
- VAT registration limit goes up to £70,000 from 1 April 2010 and the Fuel Scale Charge rates have been increased again, for VAT periods starting on or after 1 May 2010.
- Zero rating will no longer be available for aircraft on the basis of weight. From 1 September 2010, aircraft (and spares/repairs) will only be zero rated where used by airlines “operating for reward chiefly on international routes”
- ‘Place of supply’ of gas, heat and cooling will change from 1/1/2011. The detail is a bit tedious, but if you want to know all about it please ask.
- Certain postal services provided by Royal Mail will become liable to VAT from 31/1/2011, chiefly in the realms of parcel deliveries. ‘Domestic mail’ remains unchanged.
- From 1/11/2010, a reverse charge will be introduced to combat ‘Missing Trader’ fraud by certain miscreants buying or selling emissions allowances. If you’re doing it, you know who you are.
- From 1/1/2011, the rules surrounding the use of the “Lennartz” procedure are changing, such that businesses hoping to utilise it (or who have already) will be adversely affected. In essence, the Lennartz treatment allows a business to reclaim VAT in full on an asset that has both business and private use, at the time of purchase. Then, as time progresses, any private use is subject to output VAT, as and when it takes place. HMRC have never liked it, but as it emanated from a European Court ruling, they have been obliged to allow it. They are now restricting it somewhat, and also making certain aspects of it retrospective. I just love the following phrase: “ The legislation will ensure that this position is treated as having always had effect.” A quick Google on the words “retrospective taxation” suggests that this might be in breach of Article 1 of Protocol No.1 to the ECHR. Further digging, however, suggests that this topic is well beyond the scope of this blog, and I don’t intend to get into legal argument on this point – I’ll leave this to those better equipped to consider the matter.
Like I said, nothing too dramatic, but if you require further information about any of the items, please let me know.