Budget 2009 - VAT
It was a fairly uneventful VAT budget.
The Chancellor confirmed that the standard rate of VAT will revert back to 17.5% on 1 January 2010 as previously announced. Draft “anti forestalling” legislation has already been published and will be introduced in the Finance Act 2009 to prevent certain exempt businesses from planning to benefit from the rate increase.
There was speculation beforehand that the standard rate of VAT would increase to at least 18.5% and/or that the Chancellor would make use of new powers to extend the reduced rates of VAT but neither of these has happened.
Other VAT changes announced are:
- The annual VAT registration threshold has been increased from £67,000 to £68,000. The annual threshold for deregistration has been increased from £65,000 to £66,000.
- Revised fuel scale charges will apply to VAT returns on or after 1 May 2009.
- VAT exemption will apply to gaming participation fees (bingo and other games of chance) with effect from 27 April 2009.
- The rate of bingo duty will increase to 22% for any accounting period beginning on or after 27 April 2009.
- Other miscellaneous changes to the rules for bingo and games of chance.
- A package of changes to harmonise cross border supplies of goods and services and to reduce fraud, will be introduced on 1 January 2010 as part of an EU wide exercise. The UK has announced new rules in relation to EC Sales Lists for goods and services, overseas VAT refunds and the time and place of supply of certain cross border services.
- A reduced VAT rate of 5% will apply to bases for child car seats.
- A minor simplification of the option to tax 'permission' rules where previous exempt supplies have been made.
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Jane Stacey is a VAT Manager at Mercer & Hole.
