Rates of VAT
The standard and reduced rates of VAT remain unchanged at 20% and 5% respectively.
Registration / Deregistration
The registration and deregistration thresholds are increased by £2,000 to £81,000 and £79,000 respectively, with effect from 1 April 2014.
Fuel Scale Charge
The figures for the amount of output VAT to account for in respect of fuel provided for private motoring are shown on our Tax Facts card and on the HMRC website at:
The figures are based on carbon dioxide (CO2) emissions, and come into effect in the first VAT return period beginning on or after 1 May 2014.
Prompt Payment Discounts (“PPD’s”)
At present, where a PPD is offered, the supplier can calculate output VAT on the basis that the discount will be taken up. HMRC believe that increasingly PPD’s are being offered to final consumers who cannot recover the VAT, particularly in the telecommunications and broadcasting sectors, thus resulting in a tax loss where the customer does not take the discount and pays the full amount.
Legislation designed to ensure that VAT is accounted for on the full consideration paid for goods and services where PPDs are offered will, therefore, be introduced in Finance Bill 2014 to amend the UK VAT legislation so that it is clearly aligned with EU legislation with effect from 1 April 2015. The Government will, however, consult on implementation prior to the 1 April 2015 change coming into force. The legislation will also introduce a power allowing the amendment to be commenced before this date for such supplies as may be specified.
In addition, a Provisional Collection of Taxes Act (PCTA) resolution will give statutory effect to the measure from 1 May 2014 for supplies of telecommunications and television and radio broadcasting services where there is no obligation to provide a tax invoice, to protect revenue in advance of the main change.
Reverse Charge on Wholesale Supplies of Gas and Electricity
Secondary legislation will be introduced to prevent missing trader intra-community fraud in the wholesale gas and electricity sectors. This will require the customer, rather than the supplier, to account for the VAT through a reverse charge, to prevent the supplier charging VAT and then going missing before paying it over to HMRC.
The Government will informally consult on the timing with those affected, with a view to laying the necessary secondary legislation at the earliest opportunity thereafter. Under EU law member states can introduce a reverse charge in relation to those supplies which the EU have identified as being at risk of fraud, including wholesale gas and electricity.
Zero-Rate for Adapted Motor Vehicles for Wheelchair Users
The Government will consult on reform of the VAT zero-rate relief on the supply of motor vehicles adapted for the use of wheelchair users, to seek to better target the relief and reduce fraud, and to ensure that users of lower limb prosthetics can benefit from the relief. Legislation will be in a future Finance Bill.
VAT Avoidance Disclosure Regulations (“VADR”)
The Government will consult on proposals to improve the VADR and to bring it more in line with the DOTAS regime, including placing the obligation to disclose primarily on the scheme promoter. Legislation will be in a future Finance Bill.