UK Budget March 2023 VAT
posted 16th March 2023
Having just celebrated my daughter's first birthday, the Budget this year was personally my favourite one yet (other than perhaps the one a few years ago about stamp duty for first time buyers) as I look forward to next year's reduced childcare bill. However, professionally, it was quite uneventful as there is not much within it about VAT, and even less about VAT for the travel, events and property sectors. Most of the VAT "news" is confined to reviews and studies rather than policies, which is about the same as saying "yeah we'll have a think about it at some point and get back to you".
Perhaps more important to our client base are the news stories we shared earlier this year on the VAT Tribunal case for TOMS and serviced apartment operators, the EU plans for VAT accounting for online platforms and registrations for non EU businesses selling travel services in Germany. We will update you as and when we hear news in these areas. At present, there is no change and although the VAT Tribunal case in Sonder Europe Ltd has now been heard, we are awaiting the decision which we hope to bring you over the coming weeks/months.
A few very brief highlights from the Budget:
- Extension of the VAT exemption for healthcare to include medical services carried out by staff directly supervised by registered pharmacists. This simplification will take effect from 1 May 2023. At present the exemption for healthcare services is strict in its definition of "medical professionals" carrying out the services. The government hopes that this change will keep up with changes to how the NHS operates and will ease pressure on GP services.
- Review of the VAT treatment of financial services to aim to simplify the VAT treatment of financial services and fund management. Following an Industry Working Group and separate consultation, the aim here is to reduce inconsistencies and providing businesses with greater clarity and certainty. This will come as a welcome relief for many (including myself) who find VAT and financial services can sometimes be a bit of a brain ache!
- VAT relief for energy saving materials - The government has published a call for evidence on options to reform the VAT relief for the installation of energy saving materials in the UK. The call for evidence will consider the inclusion of additional technologies and the possible extension of the relief to include buildings used solely for a relevant charitable purpose. A good step in the right direction if anything comes of it.
- VAT: DIY Housebuilders Scheme Digitisation Project - The government plans to digitise the DIY housebuilders' scheme and will also extend the time limit for making claims from 3 to 6 months. The DIY housebuilders scheme is for non VAT registered individuals who build there own house and the scheme allows VAT recover on certain materials and services in the same way as a VAT registered housebuilder. The scheme is however a real pain, with very strict criteria and a short timeframe, and the need for individual paper copes of each invoice is not consistent with the increasingly technical world we live in. Hopefully the new measures will improve efficiency. I should add here that the system for VAT refunds for overseas businesses selling UK VAT refunds has gone digital and I have found this much easier already with some really great support from HMRC's Newcastle Team.