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Budget 2009 : Summary of VAT measures

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22nd Apr 2009
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  • VAT registration threshold increased from £67,000 to £68,000 with effect from 1 May 2009, a rise of 1.5%.
    BN 70
  • VAT voluntary deregistration threshold increased from £65,000 to £66,000 with effect from 1 May 2009, a rise of 1.5%.
    BN 70
  • Simplified procedure for those opting to tax a building which has been used to make exempt supplies with effect from 1 May 2009. This will mean that property owners will be less likely to have to contact HMRC for permission to exercise the option to tax. Related concessions will be withdrawn from 2010.
    BN 67
  • Reduced rate of 5% VAT currently applying to children’s car seats and related wheeled framework and booster cushions will be extended so that it also applies to car seat bases. Takes effect on 1 July 2009.
    BN 68
  • VAT fuel scale charges which provide an output tax charge to be paid when VAT on fuel used privately is subject to input tax recovery increased with effect from 1 May 2009. These rise by an average of 9.6%
    BN69
  • VAT standard rate increases back to 17.5% on 1 January 2010 – a confirmation of the announcement made in November 2008.
    BN71
  • Anti forestalling legislation has been tabled for Finance Bill 2009 to prevent businesses which suffer a VAT input tax block from manipulating supplies forward to the period when the 15% standard rate applies. The legislation will prevent connected parties from abusing the change in rate, and will also prevent 15% VAT applying to any supplies which are invoiced before the end of 2009, but for which payment is not due for at least 6 months; the measures will, however only apply where the customer cannot recover all of the VATcharged.
    BN 72
  • Various changes are made to VAT on gaming activities, including removing VAT from participation fees with effect from 27 April 2009, and increasing bingo duty to 22%.
    BN73
  • 2010 brings new cross border services rules throughout the EU. As a result, the Budget includes various announcements in relation to these changes, including changes to the place of supply rules (BN74) which will lead to services generally being taxable where consumed, amended time of supply rules (BN75), and the introduction of a requirement for suppliers of cross border services in the EU to complete EC Sales lists (BN 76). Most take effect from 1 January 2010.
  • Cross border reclaims of EU VAT will be simplified in 2010 when the rules change to permit reclaims to be made to HMRC electronically rather than on paper to the member state concerned (as now). The change will apply to claims made from 1 January 2010, and is likely to mean that smaller businesses will be able to make EU VAT reclaims in future, due to the simplification in the procedure.
    BN77
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By gilbob
23rd Apr 2009 17:59

VAT Scale Charges reduced??
I am missing something - the figures published in BN69 seem to be about 9% lower than those that took effect on 1 December 2008 when the VAT rate changed to 15%. The article seems to suggest they have increased by 9.6%. Which is correct?

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