Finance Bill Update
In extraordinary times, we can rely on taxation to provide some normality. The changes announced in the Budget will outlast the current medical crisis and perhaps we can all take a little comfort from that. The Finance Bill 2020 was published on 19th March and contained the usual, rather convoluted legislation to implement the announced indirect tax changes. All the relevant sections are listed at the foot of this bulletin (in case you want to dive into the details) but for everyone else these are some of the highlights.
Postponed import VAT accounting will be introduced from 1 January 2021 for all imports of goods after that date. This is excellent news for all importers as it will help cut the cash flow impact of having significant amounts of cash tied up by the delay between the payment of import VAT at the port and the later recovery of that VAT through an importer’s UK VAT return.
Not actually in the Finance Bill but announced in the Budget for future legislation, from 1 December 2020, VAT will be removed from digital publications so that they are entitled to the same VAT treatment as their physical counterparts, recognising that the tax system must continually evolve to keep up with technological developments and a welcome (some might say overdue) change.
On the environmental taxes front a new Plastic Packaging Tax will be introduced from April 2022 to incentivise the use of recycled plastic in packaging. After further consultation a tax rate of £200 per tonne will apply to the production or importation of plastic packaging that contains less than 30% recycled plastic. Its taken a while to get there but the hope is that this behaviour changing tax will further help our environment.
Changes to insolvency legislation will see HMRC becoming a ‘preferred’ creditor in respect of VAT and certain other tax debts where the tax is collected from employees (e.g. PAYE and employee NICs). HMRC will remain an unsecured, non-preferential creditor for other taxes levied directly on businesses, such as Corporation Tax and Employer NICs. (See Protecting your taxes in insolvency)
VAT and indirect taxes generally, are as complicated as ever. We have the experience and expertise to help businesses navigate through the tax maze.
The sections of the Finance Bill 2020 relevant to indirect taxes are set out below.
Clause 78 (FB pages 61-66, EN pages 147-150): Call-off stock
Clause 95 (FB pages 76-78, EN pages 177-178): HMRC debts priority on insolvency
Clause 94 (FB page 76, EN page 175): International trade disputes (imports)
Clause 79 (FB page 67, EN page 151): Post-duty point dilution of wine or made-wine
Clause 80 (FB page 67-68, EN page 152): Rates of tobacco products duty
Clause 89 (FB pages 73-74, EN page 166): Rates of climate change levy until 1 April 2021
Clause 90 (FB pages 74-75, EN page 168): Rates of climate change levy from 1 April 2021
Clause 91 (FB page 75, EN page 169): Rates of landfill tax
Clause 92 and Schedule 11 (FB page 75 and 152-154, EN page 170): Carbon emissions tax
Clause 93 (FB pages 75-76, EN page 173): Charge for allocating allowances under emissions reduction trading scheme
Airport Passenger Duty
Clause 87 (FB page 73, EN page 164): Rates of air passenger duty from 1 April 2021
Clause 88 (FB page 73, EN page 165): Amounts of gross gaming yield charged to gaming duty
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