VALUE ADDED TAX
Registration and Deregistration
With effect from 1 April 2010, the VAT registration threshold will be increased from £68,000 to £70,000. The deregistration threshold will be increased from £66,000 to £68,000. The registration and deregistration thresholds for acquisitions from other EU member states will also be increased from £68,000 to £70,000.
Car Fuel Scale Charges
The scale used to charge VAT on fuel used for private motoring in business cars will be amended from the start of the first VAT period beginning on or after 1 May 2010.
The revised charges are:
|CO2 band||VAT fuel scale charge|
|120 or less||570||141||47|
|230 or more||1,985||496||165|
Emission figures which are not multiples of 5 are rounded down. In the case of bi-fuel cars which have two emission figures, the lower emission figure should be used. For cars with no emission figures, HMRC have prescribed a level of emissions by reference to the engine capacity.
Change to Zero-Rating of Qualifying Aircraft
The definition of aircraft which may be supplied at the zero rate will be amended with effect in relation to supplies made on or after 1 September 2010. From that date, zero-rating will apply to supplies of aircraft ‘used by airlines operating for reward chiefly on international routes’. (The current definition refers to aircraft weighing not less than 8,000kg, and neither designed nor adapted for recreation or pleasure.)
This change is to bring UK legislation into line with EU legislation.
Gas, Heat and Cooling: Changes to VAT Treatment
With effect from 1 January 2011, the application of the reverse charge to certain supplies of gas and electricity will be extended to supplies in all categories of natural gas pipeline, where the pipeline is situated in the EU or is linked to such a pipeline. The reverse charge will also apply to heat and cooling supplied through networks.
In addition, the import VAT relief (in the form of zero-rating) will apply to all natural gas, heating and cooling imported via a network (including liquefied natural gas by tanker).
With effect from 31 January 2011, the exemption for supplies of postal services by Royal Mail will be restricted to those services which are made under a licence duty, i.e. public postal services and incidental goods. Other services (such as those made by Parcelforce) will become standard rated.
Reverse Charge for Emissions Allowances
With effect from 1 November 2010, a purchaser of emissions allowances will be required to account for the VAT due under the reverse charge procedure. This is an anti-fraud measure and will replace the zero-rating of such supplies which was brought in as an interim measure on 31 July 2009. There will be no additional reporting requirements.
Changes to Lennartz Accounting
The Lennartz procedure, under which a business may initially recover VAT in full on the purchase of an asset even where there is an element of non-business use, is to be changed. Amendments to VATA 1994 will:
- distinguish between business input tax and non-business VAT;
- ensure that VAT is not recoverable on the private use of a ‘relevant asset’;
- ensure that VAT is not recoverable on the private or non-business use of specified assets.
The capital goods scheme will be amended to take into account changes in the business/private use of an asset.
As a revenue protection measure taxpayers who choose not to ‘unravel’ existing arrangements will be required to continue to account for output tax under the Lennartz mechanism.
The changes will also remove the need for the legislation concerning the recovery of VAT on directors’ accommodation.
The changes will, for the most part, apply from 1 January 2011, with the proviso that the revenue protection measure will be deemed always to have had effect.