This supplement gives details of the changes to VAT announced at Budget 2014. Information on each of the changes is available in HM Revenue & Customs’ document ‘Overview of Tax Legislation and Rates’ (Go to https://www.gov.uk/government/collections/budget-2014-hm-revenue-customs)
Increased registration and deregistration thresholds
The taxable turnover threshold, which determines whether a person must be registered for VAT, increased from £79,000 to £81,000 from 1 April 2014. The taxable turnover threshold which determines whether a person may apply for deregistration increased from £77,000 to £79,000 from 1 April 2014. The registration and deregistration limits for relevant acquisitions from other European Union (EU) Member States also increased from £79,000 to £81,000 from 1 April 2014.
New reverse charge for gas and electricity
The Government announced that it will legislate for a reverse charge on wholesale supplies of gas and electricity in order to prevent missing trader intra community fraud. Supplies for consumption will not be affected and sector representatives are being consulted on timing.
Reform of the VAT zero rate on adapted motor vehicles for wheelchair users
The Government will consult on options for reforming the VAT zero rate on the supply of motor vehicles that have been substantially and permanently adapted for the use of disabled wheelchair users. The consultation will be launched in the summer and will seek to better target the relief, make the legislation clearer and reduce fraud. It will also clarify that users of lower limb prosthetics can benefit from the relief.
VAT: refunds for public bodies
The Government will bring forward legislation to include Combined Authorities which presently exist, or are to be created by existing legislation, within the Section 33 VAT Refund Scheme, and commits to include the London Legacy Development Corporation from 2015-16.
Prompt Payment Discounts
Legislation will be introduced in Finance Bill 2014 to amend UK VAT legislation on prompt payment discounts. Until now HMRC has interpreted UK legislation to allow suppliers to account for VAT on the discounted price offered for prompt payment even when that discount is not taken up. The change will ensure that UK and EU law are clearly aligned and that VAT is accounted for on the full consideration paid for goods and services where prompt payment discounts are offered. For supplies of telecommunication and broadcasting services where there is no obligation to provide a VAT invoice the change takes effect from 1 May 2014. For all other supplies the change will come into effect on 1 April 2015. A consultation will be carried out on implementation prior to the commencement of the main change in April 2015.
Changes in fuel scale charges
The update of the VAT fuel scale charges used for taxing private use of road fuel is no longer part of the Budget process. The charges will however continue to be updated by HMRC to reflect changes in fuel prices. The next update is effective from 1 May 2014. Businesses must use the new scale charges from the start of their next prescribed accounting period beginning on or after 1 May 2014. The new tables are published on the HMRC website at: http://www.hmrc.gov.uk/vat/forms-rates/rates/rates-thresholds.htm#8