Turnover limits
The VAT registration
turnover limit rises to £60,000
from 1 April 2005. The deregistration
limit increases to £58,000. There
are no changes to the turnover limits
for the cash accounting, annual accounting
and flat rate schemes.
Disclosure rules
The disclosure rules are extended to
schemes that give a tax advantage that
does not appear on a VAT return. For
example, the advantage might involve
VAT that cannot be deducted because
it relates to exempt supplies or non-business
activity. Currently, businesses need
only disclose use of a scheme when it
has made a difference to the figures
on their VAT return.
Two new schemes will join the list
of specific schemes that businesses
must disclose if their turnover is £600,000
or more. One scheme exploits differences
between the UK and another EU member
state’s treatment of vouchers.
The other scheme attempts to remove
the effect of an election to waive exemption
on supplies of land and property. A
new ‘hallmark’ of avoidance
is introduced to require a disclosure
of schemes that make use of face value
vouchers with low redemption rates.
The changes will take effect after Royal
Assent on dates to be announced.
Partial exemption
Some changes are made to the partial
exemption rules from 1 April 2005 to
address weaknesses in the calculation
methods. In future, approval or direction
of a special method will have to be
in writing. Customs will be able to
override special methods more often.
Another change removes the benefit of
rounding-up in the standard method for
businesses with ‘residual’
input tax of £400,000 a month
or more.
Unjust enrichment
Customs will be able to refuse VAT repayment
in a wider range of circumstances, where
businesses have accounted for VAT incorrectly
charged to customers. At present, Customs
can refuse a VAT repayment on the grounds
of ‘unjust enrichment’ only
to the extent that a business has overpaid
VAT. The measure extends the defence
of unjust enrichment to all claims for
refunds of overcharged and over-accounted
for VAT, regardless of whether they
are in a payment or repayment position
on individual VAT returns. The measure
will apply to all claims for a credit
of VAT made after 22 March 2005.
Place of supply
Some UK businesses registered for VAT
have to account for VAT on natural gas
and electricity received from suppliers
established outside the UK, following
changes introduced from 1 January 2005.
A new rule effective from 17 March 2005
establishes that the value on which
VAT is to be accounted for is the consideration
payable to the supplier.
Local authorities
Local authority provision of certain
services, such as childcare and welfare,
will be reclassified as non-business
activities rather than exempt activities
for VAT purposes from 1 April 2005.
This will remove the present restriction
on VAT refunded to local authorities
when they provide these services.
Charities and
communities
From a date to be announced, the 5%
reduced rate of VAT will be extended
to certain supplies of advice or information
connected with or intended to promote
the welfare of elderly or disabled people
or children, except where the goods
and services are exempt from VAT.
An interim grant scheme to cover VAT
costs incurred by charities in the construction,
renovation and maintenance of memorials
will be introduced while the government
negotiates at the European level for
a permanent reduced rate.
The government will make special donations
equivalent to the VAT collected from
fund-raising activities for Tsunami
relief, and the VAT collected on the
Band Aid single and Live Aid DVD.
VAT fuel scale
charges
New scales apply from the start of the
first accounting period beginning after
30 April 2005.
| |
|
3
month period |
|
1
month period |
| Cylinder Capacity |
Scale charge diesel |
VAT due per car |
Scale charge petrol |
VAT due per car |
Scale charge diesel |
VAT due per car |
Scale charge petrol |
VAT due per car |
| |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
| Up to 1,400cc |
236 |
35.15 |
246 |
36.64 |
78 |
11.62 |
82 |
12.21 |
| 1,401-2,000cc |
236 |
35.15 |
311 |
46.32 |
78 |
11.62 |
103 |
15.34 |
| Over 2,000cc |
300 |
44.68 |
457 |
68.06 |
100 |
14.89 |
152 |
22.64 |
Next
- Tax Avoidance
