Budget 2014 - Analysis of the VAT Measures Announced


When it comes to the Budget, the "Devil is often in the detail." By way of example, the specific measures relating to VAT are rarely included in the headline grabbing statement.

Now that the dust has settled, Mitchell Charlesworth's VAT expert - Gemma Gower - has produced this detailed analysis of the VAT measures hidden in the documents released by the Treasury immediately after the Budget statement:

1. Changes to VAT registration and deregistration thresholds:

The VAT registration threshold is to increase from £79,000 to £81,000 and the VAT deregistration threshold is to increase from £77,000 to £79,000 effective from 1 April 2014.. The registration and deregistration threshold for relevant acquisitions from other EU Member States will also be increased from £79,000 to £81,000.

The VAT registration threshold for non-established taxable persons making supplies in the UK remains at nil.

2. 2015 Changes to Place of Supply rules and introduction of Mini One Stop Shop (MOSS):

From 1 January 2015 the place of supply of telecommunications, broadcasting and electronic services (such as the supply of games, apps, etc) made to consumers will shift to the Member State where the consumer is located (rather than where the supplier is).

The Budget 2014 Summary
Click here or on the image above to download and print your Summary of the Budget 2014

This would have meant that suppliers would have been required to register in each and every member state that they supplied a customer.  An administrative easement, called the Mini One Stop Shop (‘MOSS’) will be legislated for.

This will allow businesses accounting for non-UK VAT due on these supplies in other Member States the option to only register in the UK and account for the non-UK VAT due in other Member States on a single return separate from the UK VAT return.

Affected businesses are urged to seek advice and ensure that systems are put in place to be able to cope with these changes.

3. Changes to VAT Accounting on Prompt Payment Discounts:

Until now HMRC has interpreted UK legislation to allow suppliers to account for VAT on the discounted price offered for prompt payment even if the discount is not taken up. This interpretation is to be changed to bring it in to line with the EU Principal VAT Directive which requires VAT to be accounted for on the consideration actually received.

The measure will have effect from 1 May 2014 for most supplies.

If you offer prompt payment discounts, and are not reducing output tax accordingly, you may be entitled to a refund of overpaid output tax.

4. Changes in Road Fuel Scale Charges:

The revalorisation of fuel scale charges is no longer part of the Budget process.

The legislation will come into effect for VAT periods beginning on or after 1 May 2014.

For more information on any of the points included in the Budget, please do not hesitate to contact our experts:

Tim Adcock
Tim Adcock

Tax Partner
Tel: 0151 255 2300
Email Tim
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David Antonia
David Antonia

Tax Partner
Tel: 0151 255 2300
Email David
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Gemma Gower
Gemma Gower

VAT Manager
Tel: 0151 255 2300
Email Gemma
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