VAT

The VAT registration threshold

This will be increased from 1 May 2009 to £68,000; the de-registration threshold will be increased to £66,000 from the same date.

The standard rate of VAT of 15%. This is to remain in force until 31 December 2009 as previously announced, whereupon it will revert to 17.5% from 1 January 2010. Anti avoidance legislation, operative from 31st March 2009, has been introduced to counter manipulation of the rate by altering the normal tax points e.g. pre-payment schemes.

Comment: Most taxpayers, including charities, who cannot recover all of the VAT on their costs will continue to benefit from the 15% general rate until 31 December 2009.

Fuel scale charges

These will be amended from 1 May 2009, details showing the new rates are available on the HMRC website.

Cross Border supplies

Changes to the time of supply rules in respect of cross-border supplies of services will be introduced from 1 January 2010. These changes will be linked to the change to the European Sales Listing (ESL) to be introduced from the same date. A new electronic intra-EU VAT refund procedure for cross-border supplies of services will be introduced from 1 January 2010. Precise details will be introduced in due course.

Comment: Likely to be affected are businesses that supply goods and/or services to business customers in other EU member states where the place of supply of these services will be the customers’ country, subject to the reverse charge by the customer in their country. The intention with this measure is to correlate the supplier’s ESL with the recipient’s reverse charge declaration. It is highly unlikely that all member states will be compliant with these required changes by the due date due to the scale of the proposal.

Option to tax

The option to tax for land and buildings will be simplified from 1 May 2009. The intention is to introduce a new automatic permission condition which will allow more taxpayers to opt to tax without seeking HMRC’s prior permission.