Value Added Tax
| From |
25 April 2002 |
1 April 2001 |
| Standard rate |
17.5% |
17.5% |
| VAT fraction |
7/47 |
7/47 |
| Registration - last 12 months or coming 30 days over |
£55,000 |
£54,000 |
| Deregistration - coming year under |
£53,000 |
£52,000 |
| Cash accounting scheme - up to |
£600,000 |
£600,000 |
|
Optional Flat Rate Scheme
As from 25 April 2002 a new scheme will be introduced for businesses with a tax exclusive annual
turnover of up to £100,000 pa, or for businesses with exempt income included, up to £125,000 pa.
This will allow such businesses to avoid having to keep detailed records of all purchases and sales
invoices in return for paying a flat rate of VAT on their tax inclusive turnover. Measures will be
introduced to increase the threshold to £150,000 pa from April 2003. The flat rate percentage will
depend upon the type of business.
Annual Accounting Scheme
As from 25 April 2002 the 12 month qualifying period for businesses with a turnover up to £100,000
will be abolished and revised measures in respect of interim payments will be introduced.
Bad debt relief
The current requirement that a business seeking bad debt relief has to write to their debtor advising
that a claim has been made will be removed from a date to be announced. Administrative concessions
introduced in December 2001 relating to bad debts and the allocation of payments between credit and
the supply of goods will be confirmed where goods are sold on HP or similar conditional sale.
Reduced rate for residential conversions and renovations
The reduced rate of 5% VAT will be extended further from 1 June 2002 to cover a range of properties.
Removal of automatic penalties
For small businesses with a turnover up to £150,000 the automatic imposition of penalties when VAT
returns or payments are late will be abolished and replaced by help and advice.
Assistance for importers on VAT paid at importation
The current requirement to pay VAT up front on imported goods will be abolished in 2003 for certain
compliant importers who will be allowed to defer payment until their VAT return is due.
Anti avoidance measures
Measures will be introduced to block three schemes which involve second hand goods, face value
vouchers, and certain partially exempt businesses.
Charities
Relaxed treatment of zero rating for new annexes used only partly for charitable purposes will be
introduced from 1 June 2002 as will be further measures for calculating VAT due upon any change
in the charitable use of buildings.
EC measures
As part of an EC reform of invoicing requirements, new measures will be introduced after March 2003
covering the details required on invoices, their retention and storage, the ability to send invoices
electronically, and the opportunity to outsource invoicing operations and self billing without prior approval.
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