The Chancellor today [23 March 2022] announced extending the Zero Rate of VAT to Energy Saving Materials, clearly in response to the soaring price of fuel and energy but to a degree permitted by the departure of the United Kingdom from the EU (European laws restricted where, and to what, Member States could apply lower rates).
HMRC have recently published a new brief that provides an important update on the VAT treatment of early termination, compensation and similar payments. All businesses must adopt the amended treatment from 1 April 2022.
The re-wording of COS Heading 14 (computer services) has been on the horizon since June 2017 when the latest HMRC Guidance was released. HMRC have now provided an update on much anticipated re-wording on VATGPB9700 (the HMRC internal manual) that begins by explaining that once again a) and b) remain unchanged:
HMRC have recently published updated guidance for some Contracted Out Service headings. Most of the changes are either minor clarifications or amendments to the heading titles. The current published guidance for all Contracted Out Services can be accessed here.
After a number of postponements, it is here. The new Reverse Charge for Construction Services will take effect from 1 March 2021. If you have not already put processes in place, it is not too late to do so, and in the main the HMRC guidance is clear and well written https://www.gov.uk/guidance/vat-reverse-charge-technical-guide
Whilst we eagerly await the outcome of the HM Treasury’s ‘VAT and the Public Sector: Reform to VAT Refund Rules’ paper and consultation, (in which a full-VAT refund model is to be explored) a new Treasury Directive has been released expanding the current Contracted-Out-Services (COS) direction
Following EU Tribunal Cases (VAT being a European Tax and largely unaffected by Brexit); HMRC have changed their stance on many forms of compensation payment – and with particular regard to the Construction Industry – how Liquidated Damages are treated.
For a number of years HM Treasury have been considering potential reforms to the Contracted-Out-Services – numbered 1 through to 76 – which you will be familiar with from our reports. As a quick recap these rules [Section 41 VATA94] are the mechanism with which NHS and Government Departments (GD) reclaims VAT on certain outsourced services.
HMRC have updated their guidance today to confirm that all businesses, regardless of annual turnover, will be required to register for Making Tax Digital as of 1st April 2022. This will extend to any businesses which have registered voluntarily for VAT.
Another bit of good news for the NHS – the Court of Appeal has recently supported the Upper Tribunal’s previous decision that lease cars provided under a salary sacrifice are not a supply for VAT purposes (as a result of the ‘de-supply’ order – “Value Added Tax (Treatment of Transactions) Order 1992 SI 1992/630”).
The Chancellor has today announced that the Hospitality and Tourism sectors will benefit from a substantial reduction of the standard rate of VAT from 20% to 5% for a period of six months (Wednesday 15 July 2020 through to Tuesday 12 January 2021).
Following Germany’s decision to reduce VAT from 19% to 16% in order to boost consumer spending and Rishi Sunak’s contemplation of a similar action here in the UK, what are the chances and the pundit’s opinions?
HMRC announced this week a few further VAT/ import duty reliefs which will support the NHS through this crisis:
when importing certain animals for scientific research, the guidance can be foundhere
when importing certain therapeutic substances like blood-grouping or tissue typing reagents (from plant, animal, other or human origin), the guidance can be found here
when importing certain substances used for non-commercial biological and chemical research, the guidance can be found here
It is hoped that the above reliefs will support the NHS in their research and testing in relation to Covid-19 without VAT and customs duty being an additional barrier. Trusts should be aware that the reliefs exist, as action may need to be taken in order for them to apply.
Please don’t hesitate to contact one of the Berthold Bauer NHS VAT team if you have any questions about the reliefs.
Some more welcome VAT news today, that the VAT on all supplies of Personal Protective Equipment (PPE) will temporarily be zero-rated to reduce the associated cost burden to organisations like the NHS and care homes.
The PM announced on Friday a VAT deferral to support UK
businesses in this unprecedented time. The deferral will hopefully help
many businesses to stay afloat during this difficult period, but it is worth
reminding all businesses that this will not abolish any VAT due, it will
simply defer the date it is due for payment and exists to help those in
financial difficulty or hardship. To summarise how this deferral will
work in practice:
The 2020 Budget did have some announcements which will
affect many of our NHS Clients. Firstly, the NHS as a whole will be set
to receive £6 billion of additional funding across the course of this
parliament, and in addition, to support the recent outbreak of coronavirus, an
emergency fund of £5 billion is being set-up. The Chancellor gave
assurances that the NHS would get whatever resource it needs at
this crucial time – a welcome announcement.