REGISTRATION LIMIT
The VAT registration threshold increased from £64,000 to £67,000 from 1 April 2008.
The turnover limit for deregistration rose from £62,000 to £65,000.
VAT RETURNS - CORRECTION OF ERRORS
For errors discovered in VAT VAT periods beginning on or after 1 July 2008 the £2,000 limit below which errors may be corrected on the VAT return for the period in which the errors are discovered increased to the greater of:
i) £10,000, or
ii) 1 per cent of turnover
Similar rules apply to corrections of returns of insurance premium tax (IPT), air passenger duty (APD), landfill tax (LFT), climate change levy (CCL) and aggregates levy (AGL).
This change benefits many taxpayers by allowing correction of sizeable errors without bringing them to the attention of HMRC and, thereby, by avoiding an interest charge.
FUEL SCALE CHARGES
The fuel scale charges were increased from the start of VAT accounting periods beginning on or after 1 May 2008. The rises are substantial. For example, for a car with CO2 emissions over 235g/Km the quarterly VAT charge is £71.94, compared with the previous charge of £63.45.
TRANSITIONAL PERIOD FOR CLAIMS
This gives effect to the judgments of the House of Lords in the cases of Fleming (trading as Bodycraft) and Condé Nast Publications Ltd.
It affects businesses registered for VAT between 1 April 1973 and 1 May 1997 who either declared more output VAT than they were liable for, or claimed less input VAT than entitled to.
The law provides a transitional period to 31 March 2009, during which businesses can make claims for overpayments (or further re-claims) of VAT accrued before the introduction of the three-year cap on 1 May 1997. Claims will be considered for the period 1 April 1973 to 1 May 1997 in respect of input tax claims and for output tax claims to 4 December 1996.
VAT EXEMPTION FOR FUND MANAGEMENT
Group 5 of Schedule 9 to the VAT Act 1994 is amended from 1 October 2008 to delete trust-based schemes and add closed-ended investment entities, which invest in securities and whose shares are included in the UK Listing Authority main Official List and funds established outside the UK, which are recognised overseas schemes under the Financial Services & Markets Act 2000.
OPTION TO TAX
The law was changed to simplify the rules for the option to tax land and property from 1 June 2008. The earliest date an option to tax will be revocable will be 1 August 2009.
There are also a number of associated changes to improve practical administration of the option to tax and its revocation, relating to:
• 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; and
• late applications for permission to opt to tax.
WITHDRAWAL OF STAFF HIRE CONCESSION
There is currently a concessionary arrangement whereby employment businesses are allowed to exclude the wages element from the value of supplies of temporary workers, and to account for VAT solely on their margin. This concession will be withdrawn with effect from 1 April 2009.
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