VAT News

2012 Budget review

22.03.2012

The Budget contains quite a number of VAT changes which will be brought in to clarify areas where the Chancellor feels there is an element of perceived abuse:

Consultation is announced on a series of measures:

Catering – Hot take away food and what constitutes premises, sports drinks

Putting VAT at 20% on all food sold above ambient temperature (except freshly baked bread) for example, seeks to sort out the long running argument on hot take away food being standard rated whilst cold take away food can be zero rated. It will add VAT to the rotisserie chicken products we buy as well as the hot pies and toasted sandwiches we buy from bakeries where the retailer might have argued that they were zero rated as they were only hot as they were “cooling” from being baked.

The sports drink aspect relates to sports nutrition drinks being taxed at the standard rate.

Holiday Caravans

The next bit of bad news for caravan park operators across Wales will be that the consultation includes the plan for VAT to be added to all sales of holiday caravans where, to date, the larger types, over 7 metres, could have been zero rated.

Self Storage

The planned addition of VAT on self storage charges also seeks to address what are perceived as anomalies in what has been a rapidly growing business sector.

Listed Building- Removal Zero Rating on Alterations

One potential change that will impact adversely on the charity and the housing sector in Wales is the removal of the zero rate for alterations to listed building whether used for residential or charitable purposes. There will be transitional rules for those midway through projects but it’s an area which will need looking at in some detail.

The grants scheme for places of worship will be extended to cover alterations but this does not appear to cover residential or other charitable properties.

Hairdresser Chair Rental

An old chestnut on the VAT front which is aimed to be clarified so expect VAT to be due on chair rents after this is enacted.

Outside of the consultation items we have news on the following:

  • VAT Registration Threshold to increase to £77,000 with effect from 1 April
  • Deregistration Threshold to rise to £75,000
  • Road Fuel Scale charges will be uplifted to reflect fuel price rises with effect from 1 May
  • Charities and UK Businesses can benefit from zero rating on costs from freight transport operators where the services relate to transport outside the EU

More significant items of news include:

VAT Exemption Review on Degree Level Education

There is an announcement that there will be a review into the VAT exemption which applies to degree type education provided. This is likely to look at the exemption as it applies to private universities but will be one to watch.

Charitable Buildings-VAT Issues

The reduced rate of VAT for the supply and installation of energy saving material will be withdrawn for charitable buildings in 2013.

Cable-operated transport systems

On a lighter note the Llandudno Cable Car will see a benefit by getting a 5% VAT rate on passenger charges, a relief introduced for cable-operated transport systems!!

Cost Sharing Exemption

The details for this will be in the Finance Bill due out on the 29th so watch this space!

Low Value Consignment Relief Abolished

The Channel Islands lost their tax appeal last week against this withdrawal so all items imported under £15 of value will from 1 April be subject to UK VAT.

Online Registration & VAT return filing

Second stage of online processing will be implemented from the 31 October 2012.