Value Added Tax
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
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.
At high turnover levels, these schemes
can - in some cases - produce good savings.
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.
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.