• At-a-glance
• Administration of Tax
• Personal Taxation
• Employment Taxation
• Business Tax
• Corporation Tax
• Capital Gains
• Savings and Investments
  
• Inheritance Tax
  
• Charities
  
• Trusts
• Anti-avoidance
• Value Added Tax
• Stamp Taxes
• Insurance Premium Tax
• Environmental Taxes
• Excise Duties
• Landline Duty

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
g/km	12-month period £	3-month period £	1-month period £
120 or less	570	141	47
125	850	212	70
130	850	212	70
135	910	227	75
140	965	241	80
145	1,020	255	85
150	1,080	269	89
155	1,135	283	94
160	1,190	297	99
165	1,250	312	104
170	1,305	326	108
175	1,360	340	113
180	1,420	354	118
185	1,475	368	122
190	1,530	383	127
195	1,590	397	132
200	1,645	411	137
205	1,705	425	141
210	1,760	439	146
215	1,815	454	151
220	1,875	468	156
225	1,930	482	160
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).

Postal Services

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.