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VAT: Registration and Deregistration Limits
The VAT registration limit will be increased to £67,000 with effect from 1 April 2008. The VAT deregistration limit will be increased to £65,000. All other conditions of registration and deregistration remain unchanged.
The registration and deregistration limits for acquisitions from other EU states will be increased to £67,000. |
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VAT: Transitional Period for Overpaid VAT Claims
Following the decisions in the House of Lords in Michael Fleming (T/A Bodycraft) and Condé Nast Publications Ltd, HMRC are to introduce legislation to provide a transitional period to 31 March 2009 in which businesses can make claims for overpaid output tax in the period to 4 December 1996 and claims to underclaimed input tax in the period to 1 May 1997.
Comment: These measures do not take account of the full extent of the House of Lords judgements. It remains to be seen what further measures HMRC will introduce to extend the period of recovery of VAT for input tax claims beyond 1 May 1997. The House of Lords ruled that the UK had not introduced any transitional period for underclaimed input tax.
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VAT: Withdrawal of Temporary Staff Concession
The current VAT concession in respect of supplies of temporary staff by employment businesses is to be withdrawn with effect from 1 April 2009. From that date, VAT will be applied to the total consideration employment businesses receive, including the wages element, in respect of the supplies they make.
Comment: Removal of this concession will add yet further irrecoverable VAT costs to the VAT exempt and partially exempt sector.
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VAT: Correction of Errors
From 1 July 2008 the limit for the automatic correction of errors in VAT and other indirect taxes will increase from the current £2,000 limit to £10,000 or 1% of a business’s turnover, subject to an upper limit of £50,000.
With the exception of Insurance Premium Tax, any errors above £10,000 will be calculated by reference to the net VAT turnover (Box 6 on the VAT return) for the return period.
Comment: These changes are welcome. The current limits have been too low for too long. Most medium to large businesses currently have to frequently file voluntary disclosure declarations of errors to HMRC.
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VAT: Option to Tax Land & Buildings
Measures will be introduced with effect from 1 June 2008 and 1 August 2009 to simplify the legislation in respect of the option to tax land and buildings. A revised Schedule 10 to the VAT Act will be introduced which will include new appeal rights for taxpayers. There will also be a new public notice which will have the force of law.
A number of associated changes to remove practical administration problems will also be introduced including -
- Opted properties held in a VAT group;
- Opted buildings for use as dwellings or for a relevant residential purpose;
- Bare land acquired for the construction of dwellings or relevant residential purposes;
- Simpler form of notification to HMRC for taxpayers with a number of properties;
- Revocation of an option to tax within a “cooling off” period;
- Automatic lapse of an option to tax 6 years after the taxpayer ceases to have any interest in a property that had been previously opted;
- Ability to exclude certain new buildings from a previous option to tax; and
- Late applications for permission to opt to tax
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VAT: Exemption for Fund Management Services
VAT exemption will be extended to include Fund Management Services provided to UK listed investment entities and certain overseas funds. The measure will come into effect from 1 October 2008 and will apply VAT exemption to the management of authorised unit trusts, trust based schemes and open ended investment companies. |
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VAT: Reduced Rate for Smoking - Cessation Products!
The VAT reduced rate of 5% was introduced in 2007 for over the counter purchases of pharmaceutical smoking cessation products. The reduced rate was expected to end on 30 June 2008. Secondary legislation will now extend the VAT reduced rate relief indefinitely from 1 July 2008.
Comment: With the smoking ban coming into effect in England, the Government has further extended its support to reduce taxation on products which will help those that wish to kick the habit!
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VAT: Fuel Scale Charges
All fuel scale charges have been changed with effect from 1 May 2008. Businesses are well advised to refer to the new scale charges which can be found on the HMRC website.
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Insurance Premium Tax
With effect from the date of Royal Ascent to the Finance Bill 2008, overseas insurers will no longer be required to appoint a tax representative in respect of insurance premium tax. The measure will also restrict HMRC’s ability to assess the insured party for tax due from certain overseas insurers. Overseas insurers writing taxable risks in the UK will still need to register for insurance premium tax but they will be able to choose whether or not to appoint an agent to act for them in the UK.
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Air Passenger Duty
Air Passenger Duty will be replaced in November 2009 with a new Aviation Duty. Legislation will be introduced in the Finance Bill 2008 to enable HMRC to proceed with the development of the new duty.
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Landfill Tax
The standard rate of landfill tax will be increased by £8 per tonne to £40 per tonne with effect from 1 April 2009.
At present, waste from cleaning up contaminated land disposed of by landfill is exempt from landfill tax. Legislation will be introduced later in 2008 to phase out this exemption and thus treat waste from contaminated land liable to landfill tax at the standard rate.
Businesses registered for landfill tax and environmental bodies will be able to contribute increased credits from their annual landfill tax liability from 1 April 2008. Currently, landfill site operators may claim credits against their annual landfill tax liability of 6%. This sum will be increased to 6.6% with effect from 1 April 2008.
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Aggregates Levy
The rate of aggregates levy will be increased from £1.95 per tonne to £2.00 per tonne with effect from 1 April 2009. |
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Climate Change Levy
The rates of climate change levy (CCL) for 2009/10 will be increased broadly in line with inflation. The new rates will increase with effect from 1 April 2009.
Climate Change Levy - Electricity from Coal Mine Methane
Currently, electricity generated from the combustion of coal mine methane is exempt from CCL on the basis that the electricity is generated from a renewable source.
With effect from 1 November 2008, electricity generated from coal mine methane will no longer be eligible to exemption from CCL. As a result, coal mine methane will become liable to the standard rate of CCL.
Climate Change Levy - Accounting Simplification
Measures will be introduced with effect from the date of Royal Ascent to the Finance Bill 2008 to simplify the nature and form of documents on which CCL is calculated and accounted. |
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If you would like advice on the Budget changes, or any VAT matter, then please contact Charles Rumbles
Tel: 01506 464444
Fax: 01506 464440
e-mail: ckrumbles@rcb-partnership.co.uk |
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