The 2021 Autumn Budget - any VAT news?
posted 27th October 2021
I usually watch the Budget each year (or half year) with much interest but I think today is probably the most uneventful for VAT purposes I have seen in a while. Not the worst news, as its fallen in the middle of the prime-time calendar VAT return submission period, so I won't write a long spiel just to use up space and time! The main developments for VAT are as follows:
No change to the VAT rates or dates for the temporary reduced rate of VAT in the hospitality sector
There were rumours that the temporary reduced rate of VAT for the hospitality sector may be extended, however this is not the case. For supplies with tax points on or after 1 October this year, the reduced rate for certain supplies of accommodation, catering and admission rose to 12.5% and it will remain at this level until 31 March 2022. At this point, the normal standard rate of 20% will prevail. For more information on the reduced rate, the qualifying services and how you may be able to use tax points to your advantage, please see this link
Introduction of the Second-hand Motor Vehicle Export Refund Scheme
The Second Hand Margin Scheme for motor vehicles allows those selling vehicles on which they could not recover any VAT to charge VAT on the margin only. This can mean a significant overall reduction in VAT payable. However, this scheme has not been available to motor dealers in Northern Ireland post Brexit. The introduction of this scheme will mean that eligible businesses who remove used motor vehicles from GB for resale in NI or the EU may be able to claim a refund in respect of VAT. Subject to agreement with the EU, the Government also plans to legislate for an interim agreement whereby the UK margin scheme can be applied to NI motor dealers for the period until the Second-hand Motor Vehicle Export Refund Scheme is implemented.
New points based penalty system for VAT to be implemented on 1 April 2022
Although not a specific Budget measure, the Autumn Budget reminded us of the new penalty system to be introduced for VAT for return periods starting on or after 1 April 2022. This will follow in due course for other taxes. Under the new rules, taxpayers will receive a point every time they miss a VAT return submission deadline. HMRC will notify them of each point. At a certain threshold of points (4 for quarterly returns), a financial penalty of £200 will be charged and the business notified. When a taxpayer has reached the relevant threshold a penalty will be charged for that failure and every subsequent failure to make a submission on time. The points will expire after a period of time of compliance.
The headline news for indirect taxes was the reduction in alcohol duties and domestic APD charges, as well as a new exemption for dental prothesis. On that note...Cheers! And back to the very important job of VAT return filing :-)
If you have any questions on VAT within the Autumn Budget or any other VAT related queries, please contact me email@example.com and 07971 642789.