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VAT - no change

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24th Mar 2010
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The Chancellor make just one comment on VAT - no change!

Audrey Fearing, VAT partner at Ernst & Young commented: "As expected, VAT will remain unchanged at 17.5%, although many are still speculating that it won’t remain at that level for long. A rate of 20% remains the most likely outcome of the first year of the next Parliament." Some firms were predicting that the rise to 20% would be announced today, although this always seemed pretty unlikely in a pre-election Budget.

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As usual, registration and deregistration thresholds will increase from 1 April, to £70,000 and £68,000 respectively. There was no mention in the Budget of the date from which smaller businesses will be required to file VAT Returns online. In the light of the demand on Government departments to come up with £11billion in savings, universal compulsory VAT filing online looked like an easy win, with scarcely any vote losing potential, following the success of PAYE and Self Assessment online. In reality, HMRC have discretion on the roll out of online services, and could therefore announce a date without any reference back to the Government.
 

New VAT fuel scale charges have been published and will apply to return periods starting on or after 1 May 2010.

A widely expected announcement, buried in the Budget Notes, is the proposal to make Royal mail charge VAT on services outside of its remit as "universal service provider". This broadly means that from 1 February 2011 Royal Mail and Parcelforce will have to charge VAT on the sort of services where they compete with courier services and commercial carriers.

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By Coates Franklin Ltd
24th Mar 2010 14:33

VAT changes

The registration and deregistration thresholds have increased to £70k and £68k respectively from 1 April 2010: http://www.hmrc.gov.uk/budget2010/businesses.htm#10

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