AAT Budget Update10 April 2013

Speakers

Phil Cook FCA CTA - Head of Tax

Steve Simmonds CTA AIIT - Director of VAT Services

Budget 2013

Value Added Tax

Budget 2013

Registration & Deregistration limits

– Registration limit increased from £77,000 to £79,000– De-registration limit increased from £75,000 to £77,000– Registration limit for relevant acquisitions from other MS

increases from £77,000 to £79,000

Effective from 1 April 2013

– Note since 1 December 2012 where a non resident business makes supplies in the UK then there is no VAT registration threshold

Budget 2013

Fuel Scale charges new rates from 1 May 2013

• See Tax Data Card

• Approved Mileage Allowance (from 1 March 2013)

– 45p per mile for first 10,000 miles 25p mile thereafter for cars

– Fuel Element of the 45p/25p is from 1 March 2013

Petrol Diesel LPG• up to 1400cc 15p 13p 10p • 1401 – 1600cc 18p 13p 12p• 1601 – 2000cc 18p 15p 12p• Over 2000cc 26p 18p 18p

All amounts include VAT

Budget 2013

Single Use Carrier bags

• On 8 April 2013 Northern Ireland has introduced a 5p levy on the supply of single use carrier bags. Wales introduced a similar scheme in October 2011 although the monies collected were to be given to good causes

• Where the retailer charges the minimum which is then remitted to DoE NI no VAT issues arise.

• Where the retailer sells the carrier bag at an amount above the 5p then VAT is due. e.g. Selling price 7.00p.

VAT due to HMRC 1.17p (7p x 1/6)Net 5.83pless 5.00p (due to DoE NI)retained by retailer 0.83p per bag sold.

See Revenue & Customs Brief 07/13

Budget 2013VAT: changes to the place of supply rules (e-services)

•Legislation to be introduced in Finance Bill 2014 to tax intra-EU business to consumer supplies of telecommunications, broadcasting and e-services in the Member State in which the consumer is located. These services are currently taxed in the Member State in which the business is established.

•The changes will take effect from 1 January 2015 and implement already agreed EU legislation into UK legislation, ensuring that these services are taxed fairly in the Member State of consumption.

•To save the need for businesses affected by these changes to register for VAT in other Member States, a Mini One Stop Shop will also be introduced from 1 January 2015. This is an IT system that will give businesses the option of registering in just the UK and accounting for VAT due in other Member States using a single return.

Budget 2013

Business Record Checks (BRC)•BRC programme was being rolled-out, region-by-region, over a 14-week period;

– London & East Anglia – 26 November 2012

– South East England – 14 January 2013

– Scotland – 14 January 2013

– Northern Ireland – 14 January 2013

– Central England – 21 January 2013

– East of England – 28 January 2013

– North Wales & the North West of England – 28 January 2013

– South Wales & the South West of England – 4 February 2013

•Failure to keep proper records could lead to a £500+ penalty

•(£250 in 1st year of trading)

Budget 2013

Bad Debt Relief

This links in with the BRC as an area being targeted by HMRC who are finding underdeclarations of VAT.

Most businesses know to claim BDR when a supplier does not pay an invoice but what they invariably forget is that input tax has to be repaid to HMRC if a supplier is not paid within 6 months of the invoice payment terms.

Regular checks on the aged debtor and creditor reports are recommended.

Budget 2013

Acquisitions/Despatches & Reverse Charges

The purchase of goods from a business in another EC member states results in VAT being due on the acquisition. Intrastat return maybe required.

The sale of goods to a business in another EC member state is a despatch and no UK VAT is chargeable if the recipient is VAT registered. ECSL & Intrastat returns.

The sale of goods to a private individual in another EC member state is a distance sale and UK is chargeable. If such sales exceed a pre-set annual limit which is circa €35,000 then VAT registration is required in that member state.

The sale of goods in the UK by a business not established in the UK requires immediate VAT registration.

The receipt of a taxable service from a business outside the UK results in VAT being due under the reverse charge rules.

The supply of taxable services to a business in another EC member state is outside the scope of UK VAT. ECSL needs completing

Budget 2013

Direct Taxation

Budget 2013

• Income TaxesPersonal Allowances & Higher Rate

PA BR Band 2010/11 £6,475 £37,400

2011/12 £7,475 £35,000 2012/13 £8,105 £34,370 2013/14 £9,440 £32,010 2014/15 £10,000 £31,865

Budget 2013

• Personal Tax Rates 2013/14– Basic Rate 20%– Higher Rate 40%– Additional Rate 45%– Higher dividend rate 32.5%– Additional Div rate 37.5%

– Trust rates 45% & 37.5%

Budget 2013

• Personal Taxes– Childcare scheme £1,200 credit max, income

level of £300,000 per couple (£150,000 each)– Statutory Residence test– Employee ‘Cheap Loan’ threshold £10,000

from 2014/15– Qualifying Policy Premium limit set at £3,600

from 6 April 2013

Budget 2013

• Personal Taxes– Pensions amendments

• Annual Allowance reduced to £40,000 for 2014/15• Lifetime Allowance reduced to £1.25m from 6 April

2014• Fixed protection if limit already breached by 2014

Budget 2013

• Personal Taxes– Cash Accounting for unincorporated

businesses• Turnover below VAT threshold can use cash paid

rather than accruals basis• Can use until no longer suitable. No lock in period• Sharkey v Werner rule abandoned – ‘Just &

Reasonable’ adjustment to be adopted.• Flat rate car exes not necessary – can use CA’s

and proportion of actual exes instead.

Budget 2013

• Business Taxes– Corporate Tax Rates

Small CoFull Rate

FY 2012 20% 24%

FY 2013 20% 23%

FY 2014 20% 21%

FY 2015 20% 20%

Budget 2013

• Business Tax– AIA £250,000 for 2 years from 1 January 2013– R&D Tax credit for large companies @ 10% of R&D

enhanced expenditure. – Employment Allowance £2,000 from 2014– CASC Rules to change through SI after Royal Assent– B/FWD – Unlimited Tax Reliefs cap from 6 April 2013

– will not include Gift Aid

Budget 2013

• Capital Gains Tax– Annual exemption raised to £10,900– ER available on EMI shares ignoring 5% rule

and allowing option period to be included in 12 month ownership requirement

– Employee Shareholder Status• £50,000 CGT exempt• £2,000 IT exemption

Budget 2013

• Inheritance Tax– Nil Rate Band frozen at £325,000 until

2017/18– Non-dom spouse limit increased to £325,000

from 6 April 2013.– Periodic & Exit IHT charges on Discretionary

Trusts to be simplified in FB 2014– Anti-avoidance measures on attribution of

loans against assets from Royal Assent.

Budget 2013

• Anti-Avoidance Measures– GAAR– TAAR

• SDLT• EEC Group Relief• Trade & Property expenses rules • Sale of Corporate tax losses• LLP’s

Budget 2013

• Anti-Avoidance Measures– High Risk Promoters penalties etc to include

‘named and shamed’ approach– Notification for ‘follow on’ tax avoidance users– Offshore Employment Intermediaries– Loans to participators schemes closed– CI & IoM agreements for disclosure of

information on UK residents with offshore ‘affairs’

Budget 2013

• High Value Residential Property– Owned by “Non-Natural Persons”– 15% SDLT charge on £2m+ properties acq’d

post 21/3/12– “Annual Tax on Enveloped Dwellings” (ATED)

of between £15,000 - £140,000 depending upon value of property.

– CGT on post 6/4/13 gains @ 28%– Limited exemptions available

Budget 2013

• Administrative Powers– RTI

• PAYE penalty system to be amended to take into account RTI including powers to make in year late payment penalties.

• Amendments to inaccuracy penalties • Late filing penalties to come into effect in 2014,

inaccuracy penalties in place now.

Budget Update

Any Questions?