VAT registration threshold changes revealed

Following the Budget 2011 announcement Nigel Harris take a closer look at the usual annual upgrading of VAT thresholds from 1 April 2011.

These include:

• the taxable turnover threshold, which determines whether a person must be registered for VAT, will be increased from £70,000 to £73,000

• the taxable turnover threshold which determines whether a person may apply for deregistration will be increased from £68,000 to £71,000
• the registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased from £70,000 to £73,000

As a knock-on effect, the simplified reporting requirement (three line accounts) for the income tax self-assessment return will continue to be aligned with the VAT registration threshold.

Also covered:

Revised VAT fuel scale charges
The VAT fuel scale charges will be revised with effect for prescribed accounting periods beginning on or after 1 May 2011. For example, the quarterly fuel scale charge for a car with a CO2 figure of 225g or more will go up to £551 from £482 (an increase of some 14.3%) and will become the new top rate – down from the previous maximum rate of 230g or more.

Threshold for Low Value Consignment Relief (LVCR) reduced
The Chancellor has lowered the threshold relating to low value imports from suppliers outside the EU from £18 to £15, although many are concerned that he has not gone far enough. For more info, see Chancellor lowers LVCR threshold.

VAT cost-sharing exemption
Consultation will continue on the options for implementing the VAT cost sharing exemption into UK legislation, although no deadline has been set for the possible implementation. The idea is that the exemption could be used by organisations such as charities, universities and housing associations wanting to make efficiency savings by working together to achieve economies of scale. Under current UK legislation a VAT cost can arise creating a barrier to the sharing of costs and services. The proposed exemption would, in certain circumstances, remove this VAT barrier.

VAT: compulsory online registration and online filing
Following the Minister for the Cabinet Office’s statement of 23 November 2010 on the “Digital Agenda”, subject to consultation on the detail, the online VAT registration, de-registration and variations, and make other changes, including removal of the UK VAT registration threshold for non-established businesses, with effect from 1 August 2012.

Continued...