Last week HMRC announced their plans for VAT if the UK ends up leaving the EU in March 2019 without a deal. They have emphasised that the government is confident a deal will be reached, but they are introducing contingency plans as a precautionary measure.
A new VAT Accounting procedure is to be implemented in October 2019 whereby the Main Contractor will become responsible for a sub-contractors VAT. In the same way in which the Construction Industry Scheme has addressed the missing tax aspect of labourers and small traders in the construction industry (by placing the burden of tax collection on Main Contractors & Developers); the purpose of the Reverse Charge for Construction Services is to reduce the occurrences of ‘disappearing trader fraud’.
It has recently come to light that Moorfields Eye Hospital NHS Foundation Trust (Moorfields), an NHS organisation which has traditionally sat outside of the English Divisional VAT Registration has opted to join.
VAT accounted for nearly a quarter of all UK tax revenues in 2015/2016; so it’s virtually guaranteed it will remain in place after Brexit (VAT in one form or another being in place for many non-EU countries: Switzerland, Norway, Israel & now even the United Arab Emirates).
The Chancellor has announced a new VAT relief alongside several other relevant statements:
– Scottish Fire and Police services will no longer be liable for VAT, this will take effect from April 2018; bringing them in line with their counterparts around the United Kingdom.
– The VAT registration threshold will remain at £85,000.00 for the next two years, despite suggestions it could be lowered following a report by the Office of Tax Simplification earlier in November
– It was announced that there would be an “Accident Rescue Charities Grant Scheme”, this appears to be an extension to the 2014 Budget where it was confirmed that VAT relief would be granted to search and rescue charities; essentially a grant to help alleviate the VAT incurred.
In relation to the NHS, they have announced that a one-off £2.8bn of additional funding will be made available in the period of 2017-2020. The funding will be released in three tranches to the health service:
– £350m 2017/18 immediate cash injection to help ease winter pressures
– £1,650m 2018/19
– £850m 2019/20
Additionally a £10bn package of capital investment in front-line services will be provided through to the end of parliament; presumably intended to support the STPs [Sustainability and Transformation Plans] that are currently active throughout the NHS.
Interestingly, the government announced that they are increasing the duty on so called ‘white ciders’ due to their low cost and high alcohol content, perhaps this will, indirectly over time have a positive effect on the NHS spend on treating alcohol related diseases such a liver cirrhosis.
A year on from the release of the interim Lease Car guidance, HMRC have sent out a letter in the last few days to clarify a few points about the application of the simplification measure available in relation to salary sacrifice arrangements for the NHS.