Budget VAT update 2009

Registration threshold

This is increased from £67,000 to £68,000 - £66,000 for deregistration on expectancy of lower turnover.

Temporary 15% standard rate

This will revert to 17.5% with effect from 1 January 2010. New legislation will prevent the 15% rate being applied to supplies made after that date in certain circumstances (e.g. by making prepayments).

VAT free bingo

Participation fees will no longer be subject to VAT. The cost will be met by increases in bingo duty.

Revised taxpoints for services received from abroad

At present the taxpoint for the reverse charge is the date of payment unless the consideration is not in money, in which case the completion date.

The revised legislation will provide for one-off supplies to be accounted for at the time of completion unless payment is made before completion, in which case the date of payment.

Reverse charges in respect of continuous supplies must be accounted for at the end of each billing period (e.g. monthly billing = end of month.) In the event there is no preconceived billing period 31 December each year unless payment is made earlier, in which case date of payment.

Changes to the Place of Supply of Services

The new default for business-to- business supplies will be that the place of supply is where the customer belongs rather than where the supplier belongs as it is now. There will still be exceptions such as land related services. The place of supply to non-business customers will remain where the customer belongs.

EC Sales Lists for services

If you supply services VAT free to businesses in other EC Member States and the customer has to account for the tax under the reverse charge mechanism EC Sales Lists must be completed from 1 January 2010. At present they only apply to cross-border supplies of goods.

The time limit for submission will be reduced from 42 days to 21 (electronic returns) or 14 (paper returns). HMRC expects to provide further information such as monetary thresholds) in a brief on 1 May.

Revised road fuel scale charges

HMRC has published a revised table. If you account for private use of fuel by the scale charge the new rates will apply from 1 May.

Children’s car seat bases now 5%

The relief on children’s car seats will be extended to include car seat bases from 1st July.

New system for 8th Directive claims

At present if you incur VAT in another Member State you can claim a refund only from that Member State.

From 1 January 2010 each Member State will process claims from its own registered person. In the UK HMRC will only accept the claims electronically. This will negate the need to make applications to individual Member States.