Mini One Stop Shop (MOSS) – Change in the rules on the place of supply of services
Although this was already common knowledge following last year’s Budget announcement, the Finance Bill 2014 will legislate the planned changes.
From 1 January 2015, intra-EC B2C supplies of telecoms, broadcasting and e-services will be subject to VAT in the EC Member State in which the consumer is located, rather than the country in which the supplier is established. As this might otherwise require suppliers to register in a number of different EC countries, legislation is being effected to introduce the concept of a Mini One Stop Shop that will allow suppliers the option of registering for VAT in the UK only to account for the VAT that falls due in other Member States.
VAT Registration and Deregistration limits
With effect from 1 April 2014, the new thresholds are as follows:
|Registration (£)||Deregistration (£)|
|UK taxable supplies||81,000||79,000|
|‘Relevant Acquisitions’From other EC Member States||81,000||81,000|
Reverse charge for gas and power
No operative date has yet been set for this change as it is still subject to continuing consultation, but the intention is to introduce an amendment to Section 55A of the VAT Act 1994 to shift the liability to account for wholesale supplies of gas and electricity to the (taxable) business recipient of the supplies rather than the suppliers.
This is designed as an anti-fraud measure intended to remove the opportunity for suppliers to charge VAT then disappear without paying it over to the Exchequer.
It should be emphasised that the new measure will NOT affect domestic supplies nor supplies to businesses that are not VAT registered nor liable to be registered.
Further information can be viewed here http://abytx.co/1d19gxz
Prompt payment discounts
HMRC have permitted suppliers to allow VAT to be charged and accounted for on the reduced amounts where early settlement discounts are offered, whether or not customers take advantage of the discount. This is not consistent with EU VAT legislation that requires VAT to be accounted for on the full consideration paid by the recipient of the goods/services concerned.
Where these transactions have been between VAT registered suppliers and VAT registered businesses it is VAT-neutral as the output tax declared and the input tax claimed are equivalent. However, HMRC are aware that the offer of such discounts is becoming more prevalent where the supplies are to unregistered final consumers, so the difference of the VAT on the full price and the discounted amount represents an absolute revenue loss where the discounts are not taken up by these consumers.
This change is to be introduced in two stages:
- 1 May 2014 ~ For supplies of telecommunications and broadcasting services where there is no obligation to provide a VAT invoice.
- 1 April 2015 ~ For all other supplies.
It is anticipated that the majority of businesses will have until 1 April 2015 to make the change and a consultation process will be put in place prior to that date.
Further information can be viewed here http://abytx.co/1qWhZ7W
Zero rating of adapted motor vehicles for wheelchair users
This is an area that has been subject to widespread fraud in the past and the Government is taking this opportunity to consult on the reform of the zero rating provisions to reduce the fraud, to better target the relief for those who are genuinely eligible and to extend the scope of the relief to include those who use lower limb prosthetics.
Road Fuel Scale Charges
In line with the usual changes, revised rates for road fuel scale charges to account for VAT on non-business use of road fuel for cars have been announced. The changes are effective from the first VAT return period that starts on or after 1 May 2014.
The new rates can be viewed here http://abytx.co/1gRuPw2
If you wish to discuss the impact of any of these changes further, please do not hesitate to contact our VAT Team at Abbey Tax.
Author: Mark Burke, VAT Manager on the ReSource Tax and VAT Consultancy Team.