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Budget 2009 - summary of VAT changes



Sadly Steve Allen died in July 2011. His wife Leah would like to thank all those who know Steve and helped contribute to his success. She has recommends Steve's clients and anyone who is interested in this article topic to contact Rob McCann from “The Vat people” on (tel) 0161 477 6600 . Please make reference to Steve Allen.

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Please accept the following summary of the Budget 2009 VAT changes with our compliments.

Steve Allen

1. Increased turnover thresholds for VAT registration and deregistration
New registration and deregistration taxable turnover thresholds have been announced, taking effect from 1 April 2009.
The registration threshold increases from £67,000 to £68,000, with the deregistration threshold increasing accordingly from £65,000 to £66,000.
The registration and deregistration threshold for the acquisition of relevant goods from other EU member states increases from £67,000 to £68,000.

2. Change In the standard rate
HMRC confirmed that the standard rate will revert to 17.5% on 1 January 2010.

3. Change of rate - anti-forestalling legislation
Targeted legislation will be introduced in Finance Bill 2009 to counter schemes purporting to apply the 15% VAT rate to goods or services to be supplied on or after the date the rate returns to 17.5% 
The measure provides that in certain circumstances a supplementary charge to VAT of 2.5% will be due on supplies of goods or services on which VAT of 15% has been declared.

4. Option to tax change
The current automatic option to tax concessions are to be withdrawn and replaced with a single concession designed to simplify the process of opting to tax.  The new rules will come into force on 1 May 2009.  Details will be notified in an Information Sheet to be published shortly. 

5. Changes to VAT fuel scale charges
The VAT fuel scale charges for taxing the private use of road fuel have decreased. This reflects changes in fuel prices and ensures that the table of CO2 bands remains aligned with the equivalent tables used for direct tax purposes. 
The new rates apply to VAT return periods beginning on or after 1 May 2009.

6. Change in the place of supply rules for cross border services EC Sales lists and recovery of VAT incurred in other EU Member States from 2010
The new rules aim to ensure that, as far as possible, VAT is due in the country in which the service is consumed (e.g. where the customer is established) rather than where the supplier is established. As such, UK business customers will be liable to account for UK VAT on most services provided by their overseas supplier under the ‘reverse charge’ provisions, rather than the supplier charging VAT.  The new rules take effect from 1 January 2010, and include:

·          new time of supply rules for services (BN75);

·          European Sales List (ESL) reporting for supplies of cross-border services and changes to ESLs for goods (BN76); and

·          a new electronic refund procedure for VAT incurred in other EU Member States (BN77).

The main changes relating to the recovery of VAT incurred in other EU Member States are:

·          businesses will be able to submit claims up to 9 months from the end of the calendar year in which the VAT was incurred, rather than 6 months as at present;

·          tax authorities will have 4 months, rather than 6 months, to make repayments, unless further information is requested, in which case the deadline extends up to a maximum of 8 months;

·          the Member State of Refund will pay interest in cases where the business meets all its obligations but deadlines are not met by the tax authorities; and

·          all EU Member States will be required to afford a right of appeal against non-payment in accordance with the procedures of the Member State of Refund.

7. Exemption for gaming participation fees
From 27 April 2009, gaming and bingo participation fees will be exempt from VAT. There is also an increase in the money prize limit for bingo duty exemption that may be offered on small-scale amusements provided commercially at, for example, family entertainment centres and adult gaming centres from £50 to £70.  Other changes include an increase in the rate of bingo duty to 22%; removing the need to list individual games for the purposes of gaming duty and extending the scope of gaming duty to include charges for commercially provided equal chance gaming; raising the gross gaming yield bandings for each gaming duty band in line with inflation; extending the scope of remote gaming duty to include remote bingo and removing remote bingo from the scope of bingo duty; clarifying the existing excise definitions of ‘gaming’ and ‘gaming machine'.

8. Reduced 5% VAT rate on children's car seat bases

From 1 July 2009, a new reduced rate of 5% will apply to children’s car seat bases.

About the Author

Steve Allen is the Director of VAT Solutions (UK) Ltd, an established independent firm of Chartered Tax Advisers, formed by Andrew Needham and Steve Allen. Both not only are respected tax advisers, but have worked for both Customs & Excise and one of the top four accountancy firms for many years. This mean that their team know both sides of the equation and are truly experts in this field.

The company has a cross-section of clients from multi-national companies through to medium-sized and numerous smaller regional firms of accountants and solicitors. They produce a regular publication 'VAT Voice', which can be downloaded directly from their website

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Article Published/Sorted/Amended on Scopulus 2009-04-23 15:17:43 in Tax Articles

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