Indirect Tax – Mark Peters

VAT

Rates and Thresholds

The VAT registration threshold has increased from £73,000 to £77,000, whilst the de-registration limit has increased from £71,000 to £75,000. In addition the registration and de-registration threshold for EU acquisitions will also be increased from £73,000 to £77,000. All changes take effect from 1 April 2012.

VAT fuel scale charges will also be changed with effect from 1 May 2011. Details of the new charges are available on HMRC’s website.

Correcting Anomalies and Closing Loopholes

A raft of VAT changes has been announced under the general banner of correcting anomalies and closing loopholes. Ostensibly the rational seems to be to reduce complexity and improve compliance; raising additional tax revenues may be a more accurate description. 

Full details have yet to be released but broadly the affected areas include;

• Listed Buildings

• Self Storage

• Sports Drinks and Hot Food

• Hairdressers

• Holiday Caravans

Businesses operating in these areas should look out for the introduction of secondary legislation during the summer.

Perhaps the most significant announcement is that VAT will be applied to approved alterations to listed buildings with effect from 1 October 2012. The treatment of works to listed buildings long appeared perverse with alterations being zero-rated whilst repairs are standard rated. Whilst these changes may well succeed in removing this absurdity, and perhaps also reduce the complexity associated with defining how particular works should be categorised, they are likely to lead to significant increases in VAT costs. ‘The changes should not have an adverse impact on places of worship, as the Listed Places of Worship Grant Scheme is being extended to cover alterations as well as repairs.

The changes planned to the VAT treatment of self storage facilities perhaps stem from the fact that HMRC have recently lost a number of Tribunal cases in this area, and this is probably an attempt to re-align the goalposts. ‘The intention of the changes appears to be to ensure all supplies of self storage are taxed at the standard rate of VAT from 1 October 2012.

ERIC’s

VAT relief will be introduced for European Research Infrastructure Consortia (ERIC’s) during the autumn of 2012.

Alcohol Duties

Alcohol duties will rise by 2% above the rate on inflation with effect from 26 March 2012.

These will increase the cost of a pint of beer by 3p, 2p to a litre of cider, 11p to a bottle of wine and 41p to a bottle of spirits.

Tobacco Duties

Tobacco duties will increase by 5% above the rate of inflation from 6pm on 21 March 2012.

The cost of a packet of premium cigarettes and a 25g pouch of hand-rolling tobacco will increase by 37p. 12p will be added to the price of a pack of 5 small cigars, and 20p to the price of 25g of pipe tobacco. 

Gambling Duties

A new machine games duty, with rates of 5% and 20% depending on the value of the stake and the prize money, will be introduced from 1 February 2013 to replace Amusement Machine Licence Duty. As a result supplies from dutiable machines will become VAT exempt.

In the meantime Amusement Machine Licence Duty rates will increase in line with inflation.

Transport Taxes

Vehicle Excise Duty will be increased in line with the Retail Price Index on 1 April 2012, with the exception of the rates for heavy goods vehicles which will be frozen in 2012-13. The new rates are available on HMRC’s website.

Technical changes will also take effect to the rules governing the use of red diesel in pleasure craft from 1 April 2012. 

Carbon Price Support (CPS)

A number of changes have been made to the CPS rates for solid fuel. The CPS rates for 2014-15 have also been announced.

Climate Change Levy

Climate change levy will increase in line with inflation (based on the retail price index) from 1 April 2013.

Landfill tax

The standard rate of landfill tax will rise by £8 per tonne to £72 per tonne for disposals made on or after 1 April 2013. The lower rate of landfill tax of £2.50 remains unchanged.

The maximum credit operators may claim against their landfill tax liability for contributions to the Landfill Communities Fund will be reduced from 6.2% to 5.6%.

Stamp Duty Land Tax

A new 7% SDLT rate will be applied to properties costing in excess of £2million with immediate effect. In addition a new super 15% rate will apply to purchases by certain ‘non natural persons’ to residential properties over £2million.  For the latter the Budget also heralds the introduction of an annual charge.