|
|
|
|
|
OUTPUT TAX |
|
Time of supply - changes for cross border services See VM ¶798 The time of supply for services received by UK businesses from outside the UK, where the recipient is required to account for VAT under the reverse charge procedure (¶9835), will change from 1 January 2010. From that date the time of supply will be governed by the time the service is performed rather than when it is paid for, and there will be a distinction between single supplies and continuous supplies. For single supplies the tax point will be when the service is complete or paid for, if this is earlier. For continuous supplies the tax point will be the end of each billing or payment period. Where continuous supplies do not have billing or payment periods the tax point will occur on 31 December each year unless an earlier payment is made. These measures are linked to the introduction of ESLs for cross border services and are intended to harmonise the reporting of such supplies with the reporting on VAT returns. Standard rate See VM ¶1095, ¶9986 As announced in the 2008 Pre-Budget Report, the temporary reduction in the standard rate of VAT to 15% will end on 31 December 2009 and the rate will revert to 17.5% on 1 January 2010. The new VAT fraction to use when a price is stated as being inclusive of VAT will revert to 7/47. New legislation will be introduced in Finance Bill 2009 to prevent artificial arrangements being used to benefit from the reduced 15% standard rate in respect of supplies made after the standard rate returns to 17.5%. This will impose an extra 2.5% supplementary charge on certain transactions which will be payable on the date the standard VAT rate reverts back to 17.5% i.e. 1 January 2010. These provisions will have effect on and after 25 November 2008. A supplementary charge will also apply where pre-payments over £100,000 are made before the rate rise and are not part of normal commercial practice. This measure applies in relation to arrangements entered into after 31 March 2009. Reduced rate See VM ¶1110, ¶1156 The 5% reduced rate for children’s car seats is extended to include the bases for such seats with effect from 1 July 2009.
|
