Here are the key VAT changes and proposals in the Budget
VAT registration and deregistration thresholds – From 1 April 2016 the VAT registration threshold will increase from £82,000 to £83,000 and the deregistration threshold from £80,000 to £81,000.
Consultation on penalty for participating in VAT fraud – The government has announced a consultation on a new penalty for participating in VAT fraud will take place in spring 2016. Subject to the consultation, the intention is to legislate in Finance Bill 2017.
Tackling online VAT fraud in goods – the goverment has announced measures to tackle the problem of overseas traders trading on online marketplaces evading VAT. The government will legislate to provide HMRC with strengthened powers for directing the appointment of a VAT representative, and greater flexibility in seeking security. Legislation will also enable HMRC to hold online marketplaces jointly and severally liable for the unpaid VAT of an overseas business that sells goods in the UK via the online marketplace’s website.
Fulfilment House Due Diligence Scheme – the government has published a consultation on the ‘fit and proper’ standards that fulfilment houses will need to meet in order to operate. Fulfilment houses will have an obligation to register and maintain accurate records once online registration opens in 2018. They will also have to provide evidence of the due diligence they have undertaken to ensure their overseas clients are following VAT rules.
The two measures above are a response to widespread VAT fraud and complaints from legitmate businesses that they are being undercut by overseas traders using sites like Amazon and Ebay who do not register for VAT.
Extension of museum & galleries VAT refund scheme eligibility – the government is to broaden the eligibility criteria for the VAT refund scheme for museums and galleries. DCMS have today published guidance https://www.gov.uk/government/publications/vat-refunds-for-museums-and-galleries on the new criteria, which will enable support to a wider range of free museums from across the UK.
To be eligible to apply for admission to the scheme museums or galleries must:
– be open to the general public for at least 30 hours per week, without exception;
– offer free entry, without prior appointment;
– hold collections in a purpose-built building;
– display details of free entry and opening hours on the museum website
Museums and galleries will also be required to complete a strategic business case as part of the application process, including:
– proof of Arts Council England Accredited status (or equivalent)
– past and/or projected visitor figures
– information on existing and planned education programmes and community engagement work.
Isle of Man charities – The government will legislate to ensure charities subject to the jurisdiction of the High Court of the Isle of Man are capable of qualifying for UK VATcharity reliefs.
VAT refunds for shared services – As previously announced in the Autumn Statement in 2014, the government will legislate to enable named non-departmental and similar bodies to claim a refund of the VAT they incur as part of a shared service arrangement used to support their non-business activities, to encourage public bodies to share back-office services, where this results in efficiencies of scale.