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Indirect taxes

The Autumn Statement resulted in a number of reforms, mainly aimed at specific business types or assets.

The Autumn Statement resulted in a number of reforms, mainly aimed at specific business types or assets.

The Autumn Statement resulted in a number of reforms mainly aimed at specific business types or assets. These are: 

Remote gambling tax reform

Announced in the Budget 2012, legislation will be introduced to amend the general betting duty, pool betting duty and remote gaming duty. This will affect all gambling operators who supply remote gambling to the UK customers as well as some changes to UK based gambling operators.

Currently the duty is charged on UK operators regardless of where the customer is based. From 1 December 2014 the duty will be charged on operators with betting and gambling profits from transactions with UK customers, ie the place of consumption.

Vehicle Excise Duty (VED) for Heavy Goods Vehicles (HGVs)

There are proposals to reduce and introduce a restructured VED rate for HGVs, the HGV Road User Levy.  This will coincide with the withdrawal of the reduced pollution certificate (RPC) discounts. This will affect owners and operators of HGVs who fall within the HGV Road User Levy and other vehicle operators that fall within RPC. The rates will come in from 1 April 2014, the same date RPC discounts will cease. 

VED

There are major changes to the VED regime: first, there will be legislation that will allow motorists to pay by direct debit annually, biannually or monthly (a 5% surcharge will apply to biannual and monthly payments).  The ‘tax disc’ has been around since 1 January 1921, but the second legislative introduction will be to remove the requirement to issue and display a paper tax disc.

This will affect individuals and organisations that own a motor vehicle. These changes will be effective from 1 October 2014.

Climate change levy (CCL)

Legislation will be introduced to correct the carbon price support rates for coal and other solid fossil fuels from 1 April 2014 to 1 April 2015. 

Fuel duty

The Chancellor announced a freeze in the fuel duty for ‘the remainder of this Parliament’. The anticipated increase in September 2014 of 1.61 pence per litre is therefore cancelled. The Chancellor went on to announce that on the cost saving will amount to the average motorist by 2015-16 saving £11 every time they fill their tank – a saving of £680 for a typical motorist. Also highlighting that ‘by the end of the parliament average pump prices will be 20 pence per litre lower than pre 2010′.

This is another measure to help small business with the average potential saving for a small business with a van being estimated at £1,300 and for a haulier business estimated at £21,000 by 2015-16.

Other fuel duty announcements are to maintain the differential between lower road fuel duty on gases (compressed natural gas, liquid natural gas and biomethane) and the main fuel duty rate until March 2014. The differential between the main fuel duty rate and the rate for liquefied petroleum gas will reduce by 1% each year until 2024.

The government will also seek EU approval to apply a reduced fuel duty rate for methanol.

VAT

Changes to the place of supply rules will be made by the introduction of legislation announced in the Budget 2013. The two changes are:

  • the place of supply from where the supplier is established to where the customer belongs, effective from 1 January 2015
  • to provide suppliers the option of registering in just one member state and account for VAT due in other member states through a Mini One Stop Shop (MOSS) VAT return, effective for supplies made on or after 1 January 2015.

The MOSS will affect:

  • supplies of broadcasting to non-business customers
  • supplies of telecommunications to non-business customers
  • supplies of e-services to non-business customers
  • UK consumer of broadcasting, telecommunications and e-services (BTE) supplies
  • operators of e-service marketplaces that act as intermediaries in the supply of telecoms or e-services
  • non-taxable legal persons, which are currently regarded as belonging where they are legally constituted.

MOSS was unanimously agreed by the member states in 2008, so it has been long anticipated, so why is it being introduced? Currently intra-EU supplies of BTE services to non-business customers are subject to VAT in the member state where the supplier belongs. From 1 January 2015 the place of supply will change to where the customer belongs.

There will be further changes to the agency legislation to reflect these rules for taxable persons acting in their own name on behalf of another when supplying telecommunication or e-services.

The place of supply rule changes could lead to a BTE supplier having to register in each member state  they make supplies and suffer the administrative burden that comes with it: that’s a potential of 28 VAT registrations. The MOSS will be implemented from 1 January 2015, giving the supplier an option of registering in just one member state and accounting for any VAT due to any member states through a single MOSS return.

This should remove the incentive for businesses to locate offshore and level the playing field for all BTE suppliers. The aim is to reduce the administrative burden and associated costs of multiple VAT registrations.

There will be additional changes to the place of supply rules to align with other member states and to close minor loopholes used by certain anti-avoidance schemes.

VAT refunds for Health Research Authority and Health Education England

Announced in the Budget 2013, the Care Bill (yet to be passed) will introduce two new health service bodies:

  • Health Education England
  • Health Research Authority.

The Finance Bill will include these bodies with the other named bodies that are entitled to recover VAT paid in relation to certain non-business activities. This will affect the two health service bodies mentioned above.

VAT treatment of refunds by manufacturers

Announced in Budget 2013, the Finance Bill will allow manufacturers to reduce their VAT payments to take into account of refunds they make to final consumers. This will be introduced by secondary legislation and regulations.

Article contributed by ACCA