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VAT
Changes announced by the Chancellor were generally just tinkering with existing legislation with no major changes being announced.
Registration limit increased to taxable turnover of £67,000 and the de-registration limit increased to a VAT exclusive figure of £64,000. The changes are effective from 1 April 2008.
The registration and de-registration threshold for relevant acquisitions from other European Union Member States will also be increased to £67,000.
Fuel scales charges used for calculating the VAT benefit for the supply of fuel for private use in cars will be amended for VAT periods commencing on or after 1 May 2008 to reflect changes in fuel prices.
The reduced VAT liability of ‘smoking cessation’ products (5%) will continue to have effect.
VAT Returns: Correction of Errors
The limit below which errors on previous returns may be corrected on the return for the period in which the errors are discovered will increase on 1 July 2008.
The limit will be the greater of £10,000 or 1 per cent of turnover, subject to an upper limit of £50,000.
For errors above £10,000 the limit for correcting errors on the next return will be calculated by reference to the net to the net VAT turnover ( Box 6 on the VAT return) for the next return period.
Option to Tax Land and Buildings
With effect from 1 June 2008 measures will be introduced to simplify the legislation relating to the option to tax land and/or buildings and will also introduce minor changes to enable taxpayers to revoke an option after 20 years.
A number of associated changes to improve the practical administration of the option to tax will also be introduced and will deal with:
- Opted properties held in a VAT group
- Opted buildings acquired for use as dwellings or relevant residential purpose and bare land acquired for construction of building for such purposes
- The introduction of a new option to simplify the option to tax process for taxpayers with a number of properties
- Early revocation of an option to tax within a ‘cooling off’ period
- The automatic lapse of an option to tax six years after the taxpayer ceased to have any interest in a property that they had previously opted to tax
- The ability, in certain circumstances, to exclude a new building from a previous option to tax
- Late applications for permission to opt to tax.
Fund Management
A measure will be introduced from 1 October 2008 to extend the VAT exemption for fund management to cover UK listed investment entities and certain overseas funds.
Transitional period for claims
HMRC has introduced a transitional period for the submission of claims previously capped. All claims covering the period from 1 April 1973 to 1 May 1997 must be submitted by 31 March 2009m
Following the loss in the Fleming and Conde Nast cases HMRC invited claims for overpaid output VAT and underclaimed input VAT which were subject to the three year cap.
Staff Hire Concession
The staff hire concession introduced in 1997, which allowed employment businesses to charge VAT solely on the margin on their supplies of temporary workers, will be removed from 1 April 2009.
Landfill Tax
The standard rate is currently £24 per tonne but this will increase to £32 per tonne from 1 April 2008 and by a further £8 to £40 per tonne from 1 April 2009.
Landfill site operators and those disposing of waste cleared from contaminated land by landfill were exempt from landfill tax, the exemption will be phased out from 1 December 2008 and all waste should be disposed of by 31 March 2012.
Aggregates Levy
The rate of aggregates will increase from £1.95 per tonne to £2.00 per tonne from 1 April 2009.
Climate Change Levy: Rates
Legislation in the Finance Bill 2008 will increase the rates of climate change levy for 2008/09, broadly in line with inflation.
The rates will be:
Taxable Commodity Rates
Electricity £0.00456 per kwh £0.00470 per kwh
Gas supplied by a gas £0.00159 per kwh £0.00164 per kwh
utility
Petroleum gas £0.01018 per kg £0.01050 per kg
Other taxable commodity £0.01242 per kg £0.01281 per kg
Alcohol Duties
The following are the revised rates effective from 17 March 2008:
Spirits (70cl) Increased by 55p per bottle
Beer Increased by 4p per pint
Still cider Increased by 3p per litre
Sparkling cider Increased by 14p per 75cl bottle
Wine Increased by 14p per 75cl bottle
Sparkling wine Increased by 18p per 75cl bottle
Tobacco
The following rate changes are effective from 6pm on 12 March 2008:
Cigarettes - New rate equal to 22% of the retail price plus £112.07 per 1000
Cigars - £163.22 per kg
Hand rolling tobacco - £117.32 per kg