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| VAT
VAT
RATES
The positive rates of VAT are unchanged,
so the standard rate remains at 20% and
the reduced rate at 5%.
CHANGES TO VAT
REGISTRATION AND
DEREGISTRATION
THRESHOLDS
The taxable turnover threshold, which
requires a person to register for VAT,
will be increased from £82,000 to £83,000
per annum.
The threshold below which a VAT-registered
person may apply to deregister will be
increased from £80,000 to £81,000 per
annum, and the relevant registration and
deregistration threshold for
intra-Community acquisitions will also be
increased from £82,000 to £83,000
per annum.
All these changes will take effect from
1 April 2016 and will prevent around
2,000 businesses from having to register
in the inancial year 2016 to 2017.
The changes will also raise the turnover
limit for income tax self-assessment
‘3 line accounts’ and increase the entry
and exit thresholds for the income tax cash
basis accounting, so that they are aligned
with the new VAT registration threshold.
OVERSEAS BUSINESSES AND
ONLINE MARKETPLACES
Changes are to be introduced to give HMRC
greater powers to tackle non-compliance
on the part of overseas businesses that
avoid paying VAT on sales made to UK
consumers through online marketplaces.
There will be 2 aspects to the changes,
which HMRC will not automatically apply,
but use only to tackle the highest risk
compliance cases.
The irst change will strengthen HMRC’s
powers to direct overseas businesses to
appoint a VAT representative, including the
power to insist that the representative is in
the UK. It will also provide greater lexibility
as regards seeking security.
The second change will enable HMRC
to make online marketplaces jointly and
severally liable for any VAT unpaid by the
overseas business on goods sold in the UK
through the online marketplace’s website.
Both of these changes will be effective from
royal assent to Finance Bill 2016.
ELECTRONIC
COMMUNICATIONS SERVICES
This measure introduced a VAT reverse
charge in the UK, designed to tackle
missing trader intra community (MTIC)
fraud. It was not a Budget measure as
such, as it was announced on
11 January 2016 and introduced by
Treasury Order on 1 February 2016.
Those perpetrating MTIC fraud charge
and collect VAT on their supplies but then
‘disappear’ without paying over the VAT
to the Exchequer. The introduction of
a reverse charge means the business
customer must now account for the VAT
due, rather than the supplier.
VAT FRAUD
The government will consult on a new
penalty for participating in VAT fraud
in spring 2016. Subject to the consultation,
the intention is to legislate in Finance Bill
2017.
The new measure only applies to wholesale
services of routing telephone calls and
associated data such as texts and images
over landlines, mobile networks or the
internet. It does not affect consumption
supplies.
FULFILMENT HOUSE DUE
DILIGENCE SCHEME
The government has introduced
a consultation on the ‘it and proper’
standards that fulilment houses will need
to meet for them to be able to operate.
They will have to register and maintain
accurate records once online registration
begins in 2018. They will also have to
provide evidence of the due diligence they
have undertaken to ensure overseas clients
are following VAT rules.
The purpose is ultimately to minimise
any costs for legitimate businesses.
INTERNATIONAL SOLUTIONS
TO VAT FRAUD
The government plans ongoing discussions
with the EU and OECD with the objective of
inding better solutions to international VAT
fraud, including different mechanisms
for collecting VAT.
MUSEUMS AND GALLERIES
The Department for Culture, Media and
Sport has published guidance on new
criteria to broaden eligibility for VAT refunds
and thus provide greater support for
museums and galleries in the UK.
VAT REFUNDS FOR SHARED
SERVICES
The government plans to introduce
legislation to enable named
non-departmental and similar bodies
to claim a VAT refund on shared service
arrangements used to support their
non-business activities.
VAT RELIEFS FOR ISLE OF
MAN CHARITIES
Legislation is to be introduced to enable
charities subject to the jurisdiction of the
High Court of the Isle of Man to receive all
the VAT beneits available under UK law.