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Value Added Tax
Registration threshold
From 10 April 2003, the level of taxable turnover at which a business
is required to register for VAT increases by £1,000 to £56,000.
The level of predicted future turnover
at which a business can deregister also rises by £1,000 to
£54,000.
Schemes for small businesses
The flat-rate scheme, which allows small businesses to account
for less output tax and not claim input tax, was introduced last
year for traders with turnover of up to £100,000pa. This is
increased to £150,000 with effect from 10 April 2003.
The level at which a business can join the annual accounting scheme
without already being registered for a year is also increased from
£100,000 to £150,000.
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At high turnover levels, these schemes
can - in some cases - produce good savings.
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Vouchers
The purchase and sale of "face-value vouchers" leads
to a number of VAT anomalies. Up to now a person buying and selling
vouchers (which include some mobile phone top-up cards) has not
had to account for VAT on sales, because the vouchers are treated
as cash rather than services.
From 9 April 2003, the issue of vouchers by a trader who will honour
them on redemption remains non-VATable; but the sale of vouchers
by anyone else becomes chargeable to VAT.
E-commerce
The Budget includes provisions which derive from European law
changes to services sold over the internet. The measures are complicated,
but in summary, from 1 July 2003:
* if you are a UK-based business buying services which are downloaded
from the internet, you will have to account for the "reverse
VAT charge" if the seller is outside the UK.
* if you are a UK-based business selling such services to anyone
belonging outside the EU, you will no longer have to account for
output tax on the sale.
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